PACRA Updates Entity Ratings of Eastern Garments (Private) Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- March 02, 2023 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

Quote

The ratings reflect the improving business profile of Eastern Garments (Pvt.) Limited an export-oriented knitwear unit. Previously, the sales mix comprised of both woven as well as knitwear garments. Recently, the major reliance is on knitwear garments. Though, the business risk remains high owing to the global knitwear industry's reliance on a few key players as well as the competitive international denim market. Profitability sizably improved attributable to the recent expansion, the Company's topline has reflected sizable growth (1HFY23: PKR 9.5bln, 1HFY22: PKR 6.4bln). The same trend has been reflected in the net profitability. Margins also recorded a robust increase. On a standalone basis, the Company's customer concentration remains high.

However, comfort is drawn given its relationships with established international brands. Ratings incorporate a stable financial profile characterized by modest leveraging and strong coverages. Further, the professional management team as well as the sponsors' ability to provide support when required in the past is noted. Meanwhile, the corporate governance framework has room for improvement. During 7MFY23, the textile exports were valued at $10.08bln compared to $10.93bln, reflecting an 8% decline YoY - the declining trend has been recorded in the last few months. The decline in exports is driven by attrition in the demand pattern of export avenues.

The hike in...