Press Release

VIS finalizes Rating of Short Term Sukuk of Al Karam Textile Mills (Private) Limited

Karachi, January 16, 2025: VIS Credit Rating Company Limited (VIS) has finalized short term rating of ‘A1’ to Al Karam Textile Mills (Private) Limited’s (‘AKTM’ or ‘the Company’) Short Term Sukuk (‘STS’ or ‘the Instrument’). Short term rating of A1 reflects strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Entity ratings of AKTM stands at ‘A/A2’ (Single A/ A Two). Outlook on the assigned entity rating of AKTM is ‘Stable’. Previous rating action was announced on August 27th, 2024.

AKTM is a vertically integrated textile setup with operational history of nearly four decades. Product portfolio includes a variety of yarns ranging from coarse to fine counts, fabric, home textiles, institutional textiles and garments. AKTM also has a retail arm namely Alkaram Studio, which was founded in 2010 and has since become a prominent local brand, with 62 retail outlets spread nationwide.

AKTM has issued short-term, secured, privately placed Sukuk amounting to Rs. 4b inclusive of a Green Shoe Option of Rs. 1.0b on 15th October, 2024. The issue proceeds will be utilized by AKTM to meet working capital requirements of its newly established Nooriabad spinning plant. The instrument has a tenor of up to six months starting from the issue date and profit will be payable at the time of redemption of ST Sukuk on the outstanding principal amount. Profit payment will be at a rate of 6M Kibor rate + 1.00%.

The assigned rating takes into account the proposed security structure, including a lien over the IPS account holding Government securities, along with the maintenance of a Debt Payment Account (DPA).

The Company experienced revenue growth in FY24, supported by a recovery in demand, while gross margins remained steady. Although net margins faced some pressure due to higher finance costs. In 2Q’FY25, revenues held stable, with exports contributing a larger share of total sales. However, gross margins experienced stress from rising energy costs, and net margins continued to reflect the impact of elevated interest rates.

Looking ahead, management anticipates an increase in exports and a gradual improvement in both gross and net margins, aided by renewable energy initiatives and the reduction in interest rates.

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/VISRatingSc

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