Press Release

VIS Upgrades Entity Rating of Gohar Textile Mills (Pvt.) Limited

Karachi, March 11, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Gohar Textile Mills (Pvt.) Limited (‘GTML’ or ‘the Company’) to ‘A+/A-1’ (‘Single A Plus/A-One’) from ‘A/A-1’ (‘Single A/A-One’). Medium to long term rating of A+ indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-1’ indicates High certainty of timely payment; Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings remains ‘Stable.’ Previous rating action was announced on June 06, 2022.

Gohar Textile Mills (Pvt.) Limited (GTML) was established in 1995 under the regulatory oversight of the Securities and Exchange Commission of Pakistan (SECP). Specializing in the production and export of home textiles, GTML operates a comprehensive manufacturing infrastructure covering spinning, weaving, fabric processing, and textile made-ups. Since its inception, the Company has focused on manufacturing and exporting various fabrics and textile home products. GTML's registered office is in Zia Town, Faisalabad, with operational units located in Tehsil Jhumra, District Faisalabad, and the weaving unit in Tehsil Gojra, District Toba Tek Singh.

Assigned ratings incorporate the medium business risk profile of the textile sector in Pakistan, marked by exposure to economic cyclicality and intense competition. The sector's performance is notably influenced by broader economic conditions, rendering it susceptible to demand fluctuations driven by economic factors. Furthermore, as a substantial contributor to total exports, the textile industry faces exposure to global economic cyclicality, geopolitical challenges, and liquidity constraints due to lengthy process of sales tax refunds. Supply-side risks, including local cotton crop production and reliance on imported raw materials, expose the sector to significant exchange rate risk.

Assigned ratings also consider the Company’s business updates wherein GTML demonstrated a consistent increase in topline during the last 3 fiscal years. In FY23, a greater proportion of raw material costs was sourced locally, thereby mitigating the impact on costs due to substantial rupee depreciation. This coupled with higher inventory gains resulted in a significant increase in gross margin. The profitability profile remained strong during the period under review.

Assigned ratings take into account the Company’s financial risk profile. Short term debt drawdown of the Company declined during the review period amid higher cash generation from operations. GTML reported equity expansion owing to increased profitability, subsequently improving the gearing and leverage ratios. Alongside improved capitalization profile during FY23 and 1HFY24, GTML maintained a healthy liquidity profile with a 4-year average current ratio of 1.7x. The ratings are also underpinned by sound cashflow coverage profile, including a strong Debt Service Coverage Ratio (DSCR). Going forward, ratings remain sensitive to maintenance of strong financial risk profile, including cashflow coverages and capitalization.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

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