Allawasaya Textile & Finishing Mills Limited

RATING REPORT | Feb-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
27-Feb-26 BBB- A2 Stable Maintain YES
28-Feb-25 BBB- A2 Stable Downgrade YES
01-Mar-24 BBB A2 Stable Maintain YES
03-Mar-23 BBB A2 Stable Maintain YES
03-Mar-22 BBB A2 Stable Upgrade -
About the Entity

Allawasaya Textile and Finishing Mills Limited (the Company), is a listed company engaged in the manufacturing and sale of different varieties of yarn. 98.5% of the Company’s shareholding is distributed among family members of Mian Jamil, Mian Idrees and Mian Tauqir Overall control vests in an eleven-member board of directors. The CEO – Mr. Alamgir Jamil carries extensive experience in the textile industry and is supported by an experienced management team.

Rating Rationale

The ratings reflect the presence of Allawasaya Textile and Finishing Mills Limited (“the Company” or “AWTX”) in Pakistan’s competitive textile industry. The Company is principally involved in the manufacturing and sale of yarn, with an operating capacity of 45,528 spindles. The product slate includes PC (Polyester Cotton) Yarn, PV (Polyester Viscose) Yarn and CVC (Chief Value of Cotton) Yarn with an average yarn count of 20s. The Company is strategically shifting its focus from CVC to PV to meet a wider demand in the market. During FY25, installed spindles declined, as the Company restructured operations by reducing two spinning lines and optimizing gaps through BMR.
During FY25, the Company’s profitability matrix and business fundamentals remained under stress due to muted local yarn demand. While net losses were incurred, the impact was partially offset by the utilization of prudent energy alternatives, supported by the installation of a 4.4MW solar plant with a further 0.6MW expected by the end of March 2026. The solarization project was funded through internal sources and strategic cost-minimization measures.
The Company displayed gradual improvement through the quarterly performance. A similar trend is observed in the Company’s gross profit margin, which stood at ~3.5% in FY25 (FY24: ~4.6%) and improved to 7.4% in 1QFY26. While there was a diminishing trend of net losses in the previous quarters, the Company made net profits during the first quarter of FY26. The liquidity somewhat strengthened with an improvement in the current ratio. The short-term leverage normalized to 9.9 (1QFY25: -11.1), and free cash flow from operations improved during the 1QFY26. The Company’s initiatives taken in prior quarters are reflected in a stable improvement in operational and financial performance.
The spinning industry is highly fragmented and consists of ~368 dedicated spinning units with total installed capacity of ~13.4 million spindles and ~198,800 rotors. However, operational capacity stood lower at roughly ~9.5 million spindles, reflecting average utilization levels of about 70–72% during the year. Yarn production showed moderate recovery, reaching approximately 2.65–2.7 million metric tons in FY25, compared to ~2.5 million metric tons in FY24.

Key Rating Drivers

The ratings are dependent upon the Company’s ability to stabilize its business fundamentals, the sustainability of its strategic initiatives, and prudent input costs. The generation of sufficient cash flows and coverages remains critical for the ratings. The adherence to the debt matrix at an adequate level is a prerequisite for an assigned rating.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Allawasaya Textile & Finishing Mills Limited


Rating Analysis

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Profile
Legal Structure

Allawasaya Textile & Finishing Mills Limited (‘The Company’ or ‘AWTX’) is a public listed company incorporated in 1958


Background

The Company was incorporated in 1958 as a private limited Company. It was converted into a public limited Company in 1965. The Company is engaged in the production and sale of cotton yarn and manmade bers and has since expanded both its operations and clientele.


Operations

The Company is principally engaged in the manufacturing and sale of Yarn. Functioning with one manufacturing unit, the total number of spindles installed is 46,488 (FY24: 46,488 spindles). The current energy requirement of the Company stands at 5MV, primarily met through MEPCO. The registered ofce and the manufacturing facility of the Company are situated at Allawasaya Square, Mumtazabad Industrial Area, Vehari Road, Multan.


Ownership
Ownership Structure

The business is primarily owned by three families which are all related. Mian Idrees Ahmed Sheikh, who was previously associated with the Maqbool group. He, along with his family, collectively holds 24.9% of the shareholding. Mian Jamil is the head of the Jamil Family collectively owns 29.30% of the total shareholding. Lastly, Mian Tauqir is the head of the Tauqir family, which owns 7.20% of the total shareholding in the Company. The remaining 2% shareholding is held by independent directors. While the remaining 35.6% is vested in the other relatives


Stability

The sponsor families are all related and the third generation of the Jamil and Tauqir families has already joined the Company. However, a documented succession plan will augment the ownership matrix of the Company.


Business Acumen

Besides AWTX, the sponsors possess shareholdings in Allawasaya Spinning Mills and Shah Shams Cotton Industries (Pvt.) Ltd. Mian Idrees Ahmed Sheikh previously associated with Maqbool group is well known textile industrialist in Multan. Mr. Alamgir Jamil, the CEO, also holds extensive experience in the textile industry.


Financial Strength

Out of the three sponsor families, i) the Maqbool Family has investments in other textile companies and the hospitality sector, ii) the Tauqir family has a diverse portfolio of investments in a number of other textile companies and iii) the Jamil family has a 100% stake in Allawasaya Spinning Mills Pvt Ltd. The family is committed to providing nancial support to the Company in times of arcticacy.


Governance
Board Structure

Eleven-member board is comprised of representatives from sponsor families and two independent directors. Despite a good mix of executive and nonexecutive members, sponsor domination on the board undermines the governance structure. Mrs. Nusrat Jamil, a member of the Jamil family is the Chairman of the board. The presence of independent oversight has strengthened the governance framework of the Company.


Members’ Profile

Mrs. Nusrat Jamil replaced her husband Mian Muhammad Jamil as the Chairman of the Company during FY19. She has been afliated with the board of the Company for almost two years now. Mian Muhammad Jamil (Jamil Family) is a graduate of textile engineering from the National College of Textile Engineering, Faisalabad. He has been associated with the Company for the last 46 years. Mian Idrees Ahmad Sheikh has an overall experience of over 30 years. Mian Tauqir Ahmed Sheikh (Tauqir Family) is also an MBA and acts as a non-executive director on the board.


Board Effectiveness

The board is supported by two specialized committees; (i) Audit Committee, and (ii) HR and Remuneration Committee, which provide assistance on relevant governance matters. To ensure effective oversight and decision making, board meetings are held regularly, with formal documentation of meeting minutes maintained.


Financial Transparency

M/s M. Yousaf Adil & Co. Chartered Accountants are the external auditors of the Company. The auditors have issued an unqualied opinion on the company’s nancial statements for the period ending 30th June 2025.


Management
Organizational Structure

The organizational structure of the Company is divided into four main departments namely, i) Finance Admin & Procurement, ii) Audit & Planning, iii) Sales & Marketing, and iv) Production. The CEO oversees the nance, admin & procurement departments, the Chairman looks after the production while other departments are headed by other executive directors.


Management Team

AWTX places high importance on experience and all members of the management have extensive experience. Mian Alamgir Jamil Khan is the current CEO of the Company. He is also an executive member of the Multan Chamber of Commerce & Industry, Multan since 2004 and has extensive experience in the textile industry.


Effectiveness

The Company has no management committees. All department heads have access to the MIS to generate relevant reports according to their departments. Some of the reports related to production are manual but are kept updated in an accurate manner.


MIS

The Company’s operating environment depends upon an IT Infrastructure supported by an in-house programmed ERP. The implementation is deemed to be successful as per the CFO and IT head of the Company. The IT system is fully integrated in all major departments and ensures proper nancial and operational control. The system for reporting has been designed as per the requirements of the board of directors.


Control Environment

The senior management including the CEO and Chairman monitor the business performance through certain key MIS reports. Daily reports include cash and bank position, stock consumption, per spindle cost, receivables, and inventory status while monthly production accounts are also maintained.


Business Risk
Industry Dynamics

The textile exports of the country reached USD 16.7bln in FY24, a slight increase from USD 16.5bln in the previous year, reecting a growth of 0.93% YoY. The highest contribution came from the composite and garments segment at USD 9.1bln, followed by the weaving segment at USD 6.5bln and the spinning segment at USD 1.0bln. During 5MFY25, the textile exports stood at USD 7.6bln. In FY25, the transition from the nal tax regime to the normal tax regime is set to impact the protability matrix of export-oriented units, with a 29% tax on prots and a super tax of up to 10%. The consistent decline in policy rates over the last two quarters, along with the anticipation of further reductions, is expected to provide a cushion in the nancial metrics of the industry.


Relative Position

The Company has been operating since 1958. However, as a group and on a standalone basis, their market share in the spinning sector is adequate. The Company has installed a capacity of 45,528 spindles in its production facility. Considering the capacity, the Company is considered low tier player in the overall textile landscape.


Revenues

During FY25, the Company’s revenue declined and stood at PKR 4,354mln (FY24: PKR 6,118mln), reflecting a contraction in the overall turnover. However, during 3MFY25, the Company’s sales registered a notable increase and stood at PKR 1,367mln (3MFY24: PKR 782mln), indicating a recovery on a quarterly basis. The improvement in sales during the period is primarily attributable to improved demand dynamics and better sales volumes.


Margins

During 3MFY25, the Company’s profitability indicators showed a marked improvement as the gross margin improved to 7.4% (3MFY24: -0.8%), reflecting better cost absorption and improved operating efficiency. Consequently, the operating margin also turned positive and stood at 3.7% (3MFY24: -5.0%). The net profit margin was recorded at 0.7% during the period (3MFY24: -12.4%), indicating a significant turnaround in earnings performance. Moreover, the finance cost as a percentage of sales declined to 1.6% (3MFY24: 5.8%), primarily on account of easing borrowing costs and improved cash flow management.


Sustainability

Going forward, the Company is strategically reducing its energy cost by transitioning from WAPDA to solar power as energy costs constitute the primary risk factor for the sustainability of the Company's cost structure.


Financial Risk
Working capital

During 3MFY25, the Company’s working capital position improved, as reflected by a decline in net working capital days to 30 days (3MFY24: 46 days). The improvement was primarily driven by a reduction in inventory days, which declined to 31 days (3MFY24: 62 days), indicating better inventory management and faster turnover. Moreover, trade receivable days also improved and stood at 23 days during the period (3MFY24: 29 days). Consequently, the Company’s short-term trade leverage strengthened and stood at -11.2% (3MFY24: 4.8%). The liquidity position of the Company also improved, with the current ratio increasing to 1.5x (3MFY24: 1.3x).


Coverages

During 3MFY25, the Company’s free cash flows from operations (FCFO) improved and stood at PKR 53mln (3MFY24: -54mln), reflecting a significant turnaround in operational cash generation. This improvement was also reflected in coverage metrics, with the interest coverage ratio increasing to 1.0x (3MFY24: -0.4x) and the debt coverage ratio similarly improving to 1.0x (3MFY24: -0.4x). Although the coverage ratios have turned positive, indicating better ability to service debt, continuous monitoring is warranted to sustain healthy cash flows and coverage levels.


Capitalization

During 3MFY25, the Company’s capital structure remained moderately leveraged, with the debt-to-equity ratio declining to 44.1% (3MFY24: 47.8%). Short-term borrowings, which constitute a significant portion of total borrowings, decreased to 36.3% (3MFY24: 41.5%) as total borrowings witnessed a downward trend and stood at PKR 798mln (3MFY24: PKR 965mln). The Company’s equity base improved slightly to PKR 1,295mln (3MFY24: PKR 1,226mln), reflecting limited support to absorb past losses while sustaining operations.
 
 

Feb-26

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Allawasaya Textile & Finishing Mills Limited


Financial Summary

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(PKR mln)


 Sep-25
3M		 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
A. BALANCE SHEET
1. Non-Current Assets 1,942 1,952 2,249 2,304
2. Investments 15 15 15 15
3. Related Party Exposure 0 0 0 0
4. Current Assets 1,674 1,624 1,317 1,650
a. Inventories 491 452 545 935
b. Trade Receivables 352 338 282 406
5. Total Assets 3,631 3,591 3,580 3,969
6. Current Liabilities 1,152 1,140 900 786
a. Trade Payables 366 368 383 344
7. Borrowings 798 813 995 1,380
8. Related Party Exposure 223 193 158 105
9. Non-Current Liabilities 163 160 205 129
10. Net Assets 1,295 1,285 1,323 1,568
11. Shareholders' Equity 1,295 1,285 1,323 1,568
B. INCOME STATEMENT
1. Sales 1,367 4,354 6,118 3,776
a. Cost of Good Sold (1,266) (4,200) (5,839) (3,631)
2. Gross Profit 102 154 280 145
a. Operating Expenses (52) (148) (134) (115)
3. Operating Profit 50 6 145 29
a. Non Operating Income or (Expense) (17) 48 (76) 19
4. Profit or (Loss) before Interest and Tax 33 54 69 48
a. Total Finance Cost (23) (150) (272) (249)
b. Taxation 0 27 (42) 36
6. Net Income Or (Loss) 10 (70) (245) (165)
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 53 32 174 33
b. Net Cash from Operating Activities before Working Capital Changes 28 (145) (119) (166)
c. Changes in Working Capital (42) 408 445 2
1. Net Cash provided by Operating Activities (14) 263 326 (164)
2. Net Cash (Used in) or Available From Investing Activities (8) (104) (26) (227)
3. Net Cash (Used in) or Available From Financing Activities 15 (60) (217) 387
4. Net Cash generated or (Used) during the period (7) 99 83 (4)
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 25.6% -28.8% 62.0% -21.8%
b. Gross Profit Margin 7.4% 3.5% 4.6% 3.8%
c. Net Profit Margin 0.7% -1.6% -4.0% -4.4%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 0.8% 10.1% 10.1% 0.9%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 3.1% -5.4% -17.0% -10.0%
2. Working Capital Management
a. Gross Working Capital (Average Days) 54 68 65 119
b. Net Working Capital (Average Days) 30 36 43 95
c. Current Ratio (Current Assets / Current Liabilities) 1.5 1.4 1.5 2.1
3. Coverages
a. EBITDA / Finance Cost 3.4 0.9 1.0 0.5
b. FCFO / Finance Cost+CMLTB+Excess STB 1.0 0.1 0.3 0.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 5.3 -5.8 -8.7 -3.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 44.1% 43.9% 46.6% 48.6%
b. Interest or Markup Payable (Days) 79.6 54.1 69.2 109.2
c. Entity Average Borrowing Rate 8.4% 13.4% 19.0% 16.5%

Feb-26

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Allawasaya Textile & Finishing Mills Limited


Rating Scale

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Feb-26

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Allawasaya Textile & Finishing Mills Limited


regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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Feb-26

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