Press Release
VIS Assigns Preliminary Rating to Proposed Short Term Sukuk of Al-Karam Textile Mills (Private) Limited
Karachi, May 08, 2026: VIS Credit Rating Company Limited (VIS) has assigned a preliminary rating of ‘A1(plim)’ (A one preliminary) to the proposed Short-Term Sukuk (STS) of PKR 2 billion of Al-Karam Textile Mills (Private) Limited (AKTM). The short-term rating of ‘A1(plim)’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The rating will be finalized upon receipt and review of the final documents for the Sukuk.
AKTM, part of the Alkaram Group, is a vertically integrated textile manufacturer with nearly four decades of operations. The Company produces a diversified range of yarns, fabrics, home textiles, institutional textiles, and garments for domestic and international markets. It maintains a strong international footprint through design studios and marketing offices in the US, UK, and Europe, supporting its export-led model. Domestically, its retail arm, Alkaram Studio (launched in 2010), has grown into a leading lifestyle brand with over 62 outlets across Pakistan.
The Company plans to issue a rated, privately placed, partially secured short-term Sukuk of up to PKR 2.0 billion, inclusive of a PKR 500 million green shoe option, to finance its working capital requirements, with a tenor of six months and pricing at 3-month KIBOR plus 100 basis points. Both profit and principal are payable in a single bullet payment at maturity.
The rating of the proposed Short-Term Sukuk is underpinned by the security structure, including a ranking charge over current assets with a 25% margin, a lien on cash-equivalent security covering up to 10% of the issue amount, and the maintenance of a Debt Payment Account, to be funded from the 5th month of the Sukuk issuance date and fully funded 10 days before maturity.
The rating of the Company reflects its position as a leading textile exporter with fully integrated operations, a diversified product base, longstanding customer relationships, and continued support from the Al-Karam Group. Recent capacity additions are expected to support medium-term growth and operational efficiency. The capital structure remains leveraged, driven by higher working capital requirements and expansion-related borrowing, resulting in continued reliance on short-term debt. Although some moderation has been observed recently, leverage indicators remain elevated. Debt coverage and the liquidity profile remain adequate.
Going forward, the Company’s profitability profile is expected to benefit from a strong pipeline of orders with better margins, together with improved sourcing efficiencies and a gradual shift towards renewable energy, which is likely to reduce energy costs and support margin stability over the medium term.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf