Press Release
VIS Reaffirms Entity Rating of Al Karam Towel Industries (Pvt) Ltd
Karachi, December 08, 2025: VIS Credit Rating Company Limited (VIS) reaffirms the entity ratings of ‘A-/A2’ (Single A Minus/A Two) for Al Karam Towel Industries (Pvt) Ltd. Long-term entity rating of ‘A-’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A2’ indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 14, 2025.
Al-Karam Towel Industries (Private) Limited (‘AKTI’ or ‘the Company’) is a private limited company incorporated in 2004 under the Companies Ordinance, 1984 (now Companies Act, 2017). The Company is primarily engaged in the manufacturing and export of terry towels. AKTI operates a vertically integrated manufacturing setup, encompassing spinning, weaving, dyeing, bleaching, stitching, packing and finishing processes. The Company’s production facilities comprise of 12 units located in S.I.T.E. and Nooriabad, while its head office is located in S.I.T.E.
Pakistan’s textile sector remains a vital contributor to the economy, accounting for ~55% of exports and 8.5% of GDP in 9MFY25. While supported by a vertically integrated value chain and local cotton cultivation, domestic production fell to 5.5 million bales in FY25 due to climate challenges, water scarcity, and rising input costs, increasing reliance on imports. Exports grew 7.4% YoY to USD 17.9 billion, led by value-added segments, with the US, UK, Spain, Germany, and Netherlands as key markets. Policy changes raising input costs challenge downstream exporters, while cost advantages over Turkey and PKR depreciation may partially offset pressures.
The ratings are supported by AKTI’s established business profile, resilient export operations, and strong relationships with key international buyers. Profitability declined in FY25 due to elevated power cost; however, business volumes remained stable and the Company continued to benefit from its market position and access to subsidized financing. Capitalization indicators, including gearing and leverage, increased modestly due to higher short-term borrowings for working capital, while liquidity remained adequate, supported by a current ratio above 1.0x and improved operating efficiency. Debt service and cash flow coverage metrics remain adequate.
Looking ahead, profitability is expected to improve with the installation of wind and solar power projects. Maintaining satisfactory liquidity and debt coverage, alongside strengthening capitalization metrics, will remain key rating considerations.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf