Khaadi Pakistan Limited's (formerly: Khaadi Pakistan SMC Pvt. Limited) status was converted from an SMC to a public unlisted company and its name was changed to Khaadi Pakistan Limited ("Khaadi" or "the Company"). The Company was incorporated in Pakistan on July 15, 2015 under the Companies Ordinance, 1984 (now the Companies Act, 2017), with its registered office at 22nd Floor, Sky Tower B, East Wing, Dolmen City, HC-3, Marine Drive, Clifton, Karachi. Khaadi was initially incorporated as Khaadi Pakistan (SMC-Private) Limited and was renamed Weaves Pakistan (SMC-Private) Limited on September 5, 2024, following the formation of the Weaves group structure. Subsequently, the Company was renamed Khaadi Pakistan (SMC-Private) Limited to align its legal name with the Khaadi brand. On September 8, 2026, the Company’s status was converted from a private company to a public unlisted company and its name was changed to Khaadi Pakistan Limited.

Khaadi brand was founded in 1998 by Shamoon Sultan as a single handloom store at Zamzama, Karachi, and is built around a design philosophy rooted in Pakistani craftsmanship and culture. culture. The brand’s products were sold through a sole proprietorship until the business was transferred to the Company with effect from May 1, 2016. Khaadi is now the flagship brand of the Weaves group, whose holding company, Weaves Corporation Limited, also houses Chapter 2, Kanteen and SS Chai. Since inception the Company has grown substantially, with revenue rising from PKR 2.2 Bn in CY12 to PKR 19.4 Bn in CY19 and PKR 25.1 Bn in CY25 - a compound annual growth rate of 20.6% - a trajectory that continued despite a temporary setback during the COVID-19 pandemic, when non-essential retail was suspended. The Weaves group reports over 1,400 team members and over 42 locations across four countries, and IFC (World Bank Group) invested USD 25mln in the group for a 20% stake. In CY25, the Company acquired the Khaadi brand intellectual property rights from its parent, Weaves Corporation Limited, at a mutually agreed price of PKR 8.0bln, payable on demand anytime with a grace period of 12 months.

The Company is principally engaged in designing, marketing, distributing and selling textile products and accessories under the “Khaadi” brand, spanning ready-to-wear, unstitched fabrics, home, kids, accessories, bags and fragrances. Sales are made through a network of 31 physical outlets spreading nationwide, 11international stores and 3 fulfillment centers spread in UK, US and UAE markets and an e-commerce platform (launched in 2014). Store operations are supported by contractual retail staff, with total headcount, including contractual employees, at 642 at end-CY25 (Dec-24: 645). The Company’s head office premises are leased through an associated company, Weaves Properties (SMC-Private) Limited. The Company also holds investment property at fair value, including a leasehold plot at SITE, Karachi, formerly used for production. The Company also plans to raise up to PKR 8.3bln through a pre-IPO placement and IPO, with proceeds intended to upgrade the remaining 13 out of total 31 existing outlets into larger Experience Stores and support expansion in product range and frequency, which is expected to deepen its presence in existing markets.

Currently, the Company is 100% owned by Weaves Corporation Limited ("the Parent”), and after issuing 20% fresh equity, the Parent will be diluted to an 80% shareholding. As per the group structure presented by the Company, Weaves Corporation Limited is 80% held by Weaves Holdings Limited (in turn 100% held by Mr. Shamoon Sultan) and 20% by IFC. The group also includes Weaves F&B Pakistan (SMC-Private) Limited (restaurants and cafés) and overseas retail and e-commerce entities in the UAE, UK and US held through BVI vehicles; the Company's parent hold these subsidiaries.

The ownership structure has remained stable, with the Parent holding 100% of the Company across the review period. The Company has also undertaken a bonus share issuance, increasing the paid-up share capital to PKR 250mln (to meet up with the listing regulations requirement in advance before undertaking the IPO), and plans to proceed with an IPO through the issuance of new shares. The proposed IPO is expected to broaden the shareholder base while providing additional equity funding for the Company’s expansion.

The sponsor, Mr. Shamoon Sultan, has led the business since 1998 and has over 25 years of experience in the textile and retail industry. He holds an undergraduate degree in Textile Design from the Indus Valley School of Art and Architecture and has won several fashion and retail awards. Under his leadership, Khaadi has grown from a single store into a multi-product group with international presence and has expanded into home, accessories, fragrances and food and beverage. The group is supported by IFC as a substantial 20% shareholder in the Parent.

The sponsors have demonstrated support for the Company by injecting capital whenever required as well as by making their strategic decision to go for IPO by way of issuance of fresh shares instead of an offer for sale of their own shareholding and through an IFC-backed capital base at the Parent level.

The governance is assured through a seven-member Board, comprising three Executive Directors and four Independent Directors. The Board includes Mr. Muhammad Asif Peer, Chairperson and Independent Director, Mr. Shamoon Sultan, Executive Director and CEO, Ms. Saira Ruth Shamoon and Mr. Kashif Shah as Executive Directors, and Mr. Abdul Samad Dawood, Ms. Maheen Rahman and Mr. Muhammad Raza Pirbhai as Independent Directors. The composition provides a balance of executive representation and independent oversight, with directors bringing diverse experience across technology, manufacturing, investment management, financial services and other sectors.

Mr. Muhammad Asif Peer, Chairperson and Independent Director, is associated with Systems Limited and holds directorships across technology and related businesses. Mr. Shamoon Sultan, Executive Director and CEO, is the Founder of Khaadi and has led the business since 1998, bringing over 25 years of experience in the textile and retail industry. Ms. Saira Ruth Shamoon and Mr. Kashif Shah serve as Executive Directors, with their external directorships including Weaves Holding Limited, The Bank of Khyber, At-Tahur Limited and Zayn Capital Pakistan (Pvt.) Limited. Mr. Abdul Samad Dawood is an Independent Director with directorships across the Engro and Dawood group entities and various business and educational institutions. Ms. Maheen Rahman, Independent Director, is associated with InfraZamin Pakistan and serves on the SECP Policy Board, while Mr. Muhammad Raza Pirbhai, Independent Director, has directorships across businesses in the food, property and other sectors. Overall, the Board brings diverse sectoral and functional exposure, supporting the Company’s strategic direction and governance oversight.

The Board comprises seven members with a mix of Executive and Independent representations, including four Independent Directors. The presence of a majority of Independent Directors provides broader oversight over the founder-led business, while the Executive Directors provide direct involvement in the Company’s strategic and operational matters. The diverse professional backgrounds and external directorships of Board members further support the breadth of oversight. Continued focus on formal Board committees, particularly audit and related party review functions, would further strengthen the governance framework.

Yousuf Adil, Chartered Accountants (formerly Deloitte Yousuf Adil), is the external auditor of the Company and is placed in category “A” on the State Bank of Pakistan’s panel of auditors. The auditor issued an unqualified opinion on the financial statements for the year ended December 31, 2025.

The Company operates within the Weaves group’s functional structure. The senior management team reports to the Founder & Dreamer, Mr. Shamoon Sultan, and comprises Mr. Kashif Shah (Leader – Strategy), Ms. Saira Shamoon (Leader – Product Design), Mr. Tahir Iqbal (Group Chief Financial Officer / Leader – Finance), Mr. Yousuf Akbar Agha and Mr. Zeeshan Nasir (Leaders – Sourcing), Mr. Muhammad Tahir (Leader – Customer Experience), Mr. Muhammad Rehan Qadri (Leader – E-Commerce) and Mr. Ahmed Khan (Leader – Real Estate). Corporate functions’ services are provided by Weaves Corporation Limited against a management fee charged as a percentage of the Company’s revenue.

The senior management team comprises experienced professionals with functional leadership across the Company’s core value chain. Mr. Kashif Shah, Leader Strategy, brings experience from J.P. Morgan, HBL, UBL and Aisha Steel Mills, with responsibility spanning financial strategy, governance, planning, reporting, global logistics, store roll-out and procurement. Ms. Saira Shamoon, Leader Product Design, oversees the creative direction and design of the Company’s brands, while Mr. Rehan Qadri, Leader Technology & E-Commerce, leads technology and e-commerce across Pakistan, UAE, UK and US, with experience in digital transformation, IT governance and information security. Mr. Muhammad Tahir, Leader Customer Experience, has been associated with Khaadi since 2013 and oversees the retail function in Pakistan, while Mr. Tahir Iqbal, Leader Finance, brings experience from Arif Habib Corporation, Aisha Steel Mills and Power Cement and oversees budgeting, forecasting, financial reporting and risk management. Mr. Zeeshan Nasir and Mr. Yousuf Agha, Leaders Sourcing, bring over two decades of experience in supply chain, sourcing, merchandising and textile manufacturing, including exposure to international retailers, while Mr. Ahmed Khan, Leader Real Estate, brings 16 years of local and international real estate experience covering property acquisition, development and network expansion.

The management structure has dedicated leadership across strategy and finance, international business, and product design, sourcing, customer experience, technology and e-commerce, and real estate, providing functional depth across the retail value chain. The presence of experienced professionals with established sectoral and functional backgrounds supports execution and reduces dependence on a single individual for day-to-day operations. However, formal management committees have not been established, with strategic, financial and operational matters managed through the respective functional leadership structure.

The Company’s technology landscape is built on Microsoft Dynamics 365 Finance & Operations (implemented in February 2018, supported by HexSync with quarterly upgrades) for financial ledgers, supply chain, procurement and inventory, integrated with Dynamics 365 POS at store tills. Digital commerce runs on Salesforce Commerce and Service Cloud (implemented in February 2023, supported by Nestosh), linked to the back end through OneKommerce, an in-house integration platform that unifies stock availability, catalogs and order management. Human resources and payroll are managed on the Decibel cloud HRMS (implemented in July 2021). Power BI, implemented in-house in February 2018, ingests data across the ERP, POS and CRM systems to provide management dashboards. Given the scale of operations, the information management infrastructure is considered adequate.

Financial statements are audited by a category “A” auditor and prepared under IFRS and the Companies Act, 2017. Lenders exercise additional oversight through liens over collection and operating accounts and registered charges over assets. Certain sales tax and income tax matters remain in litigation, which suggests room to strengthen tax compliance processes. Similarly, EY Ford Rhodes (A Member Firm of Ernst & Young Global)) is the full time internal auditor who constantly reports to Board Audit Committee of the Independent Board.

Khaadi operates in Pakistan’s branded apparel and lifestyle retail segment, representing the downstream, value-added end of the textile value chain. The textile sector remains a key component of the economy, accounting for ~18.2% of the QIM in FY26, while the broader wholesale, retail and trade segment contributes ~30.5% of services. Within branded apparel retail, the industry continues to face raw material and supply-side challenges. While cotton production is estimated to improve to ~5.3mln MT in the Aug-26 marketing year from ~5.0mln MT previously, domestic supply remains supplemented by significant imports, with ~4.5mln MT projected for Aug-26. Water shortages, pest attacks and tax-related distortions continue to constrain domestic cotton production. Local cotton prices averaged ~PKR 15,464/maund during 1HFY26, reflecting softer international cotton prices. At the downstream end, textile exports showed modest growth, with exports increasing ~1.4% YoY to ~USD 15.0bln during 10MFY26, supported by higher-value segments including readymade garments. However, elevated energy tariffs, factory operating costs and broader cost pressures continue to challenge industry margins. For a domestically focused retailer such as Khaadi, demand remains particularly sensitive to consumer purchasing power, inflation and pricing, while competition among organized apparel brands remains high.

Khaadi is among the prominent organized apparel retail brands in Pakistan, competing with established players including Sefam, Gul Ahmed, Nishat, and Al Karam. In the organized apparel retail sector is primarily driven by brand strength, product offering, and retail presence. Outlet networks remain concentrated in the major metropolitan markets – Lahore (18.8%), Karachi (14.6%), Islamabad (10.1%) and Faisalabad (6.0%) - with the remaining 50.5% distributed across secondary and tertiary cities. While formal market-share data is unavailable, relative positioning based on FY26 outlet networks indicates that Sefam, Gul Ahmed, Nishat, Al Karam, and Khaadi account for approximately 27.3%, 24.9%, 22.5%, 14.9%, and 10.3%, respectively, of the combined outlets of these five players. Khaadi’s strategy is differentiated in three respects. Firstly, it is focused on womenswear rather than competing across the full breadth of apparel categories, and its product mix is progressively weighted towards ready-to-wear. Secondly, it has elected to operate a smaller number of larger and better-located Experience Stores. Lastly, it is concentrated in the principal metropolitan markets, in which higher footfall and higher realised value per transaction support greater profitability. Khaadi follows an asset-light model, sourcing its finished goods at arm’s length. This arrangement supports design flexibility and limits investment in manufacturing assets. The Company targets Pakistan’s expanding female consumer base, estimated at approximately 122.5 million in 2025; of which women aged 18 and above are the primary product users.

Net sales stood at PKR 25.1bln in CY25 (CY24: PKR 24.6bln), up ~2.2%. The Company derives the majority of its revenue from its retail network, followed by e-commerce platform sales and exports. Khaadi differentiates itself through designer-led weekly product drops and a strategic shift from a “going-wide” to a “going-deep” strategy, supported by larger, experience-oriented stores averaging around 13,000 sq. ft., with some stores reaching up to 30,000 sq. ft. During 6MCY26, net sales stood at PKR 17.1bln, supported by resumed exports of PKR 2.4bln on a gross basis; however, discounts rose further to ~11.1% of gross sales. Exports are made to group entities abroad, which carry inherent related-party receivables risk.

Gross margin improved to 36.6% in 6MCY26 (CY25: 36.2%; CY24: 33.7%), reflecting the shift from in-house processing to sourcing finished goods. Operating margin rose to 15.2% (CY25: 12.8%; CY24: 12.0%) despite higher selling expenses, mainly outlet rents paid to an associate "Weaves Properties (SMC-Private) Limited", on a revenue-linked basis. EBITDA was PKR 2.9bln in 6MCY26 (CY25: PKR 3.6bln). CY25 profit included a non-cash fair value gain of PKR 3.3bln on investment property, largely offset by a PKR 3.2bln fixed asset write-off. Finance cost fell to 2.4% of sales in 6MCY26 (CY25: 2.8%) on lower rates and the term-out of short-term debt, and net margin improved to 9.4% in 6MCY26 (CY25: 6.6%).

Khaadi benefits from strong brand equity built over more than two decades, a nationwide store network, an established e-commerce channel and group support in sourcing, guarantees and shared services. Emerging concepts (accessories, bags, fragrances and the Home Café) support diversification. The Company plans to raise upto PKR 8.3bln through a pre-IPO and IPO to convert all 31 of its stores into Experience Stores well before CY28. As at 1H CY26, 18 stores have been converted and the remaining 13 are scheduled for upgrade, while 8 new stores are planned for CY26 and 1HCY27, funded through IPO proceeds and internal cash. The planned investment is expected to deepen penetration in existing markets and support future revenue growth, although execution and the ability to maintain margins amid elevated discounting will remain important.

Working capital remains efficient, supported by a predominantly cash and card-based retail model. Inventory days stood at 53 in 6MCY26 (CY25:64; CY24:60), although inventories rose to PKR 5.3bln from PKR 4.7bln at Dec 25. Receivable days were 9. Payable days rose to 71 (CY25: 68; CY24: 31), reflecting greater supplier credit, including from related parties and through supplier finance arrangements (financial charges of PKR 513mln in 6MCY26). Net working capital days were (9) (CY25:6), and the current ratio was 1.0x (CY25:0.9x), indicating a relatively tight liquidity position. Short-term borrowings  rose to PKR 1.1bln in 6MCY26  (CY25: PKR 551mln).

Coverages improved with lower markup and stronger earnings. FCFO was PKR 2.8bln in 6MCY26 (CY25: PKR 4.5bln,). EBITDA covered markup on borrowings 7.2x (CY25: 5.1x). Additionally, the Company strategically shifted its debt mix toward long-term borrowing to finance its capital expenditures. However, this strategy resulted in a higher current maturity of long-term debt during 6MCY26, leading to a moderation in debt service coverage to 1.4x (CY25: 3.8x). Despite the decline, coverage remains adequate. Debt payback stands at 1.7 years (CY25: 1.7years). Liquid cover is (0.2)x at Jun-26, (Dec-25: 9.8x), and cash balances are PKR 151mln.

Including the PKR 8.0bln payable to the Parent for the brand IP, gearing was ~50.4% at Jun-26 (CY25: 49.2%; CY24: 54.2%). This additional PKR 8.0bln is repayable on demand at any time after 12 months from the Dec-25 balance sheet date, which introduces liquidity risk if called. Financial borrowings are now largely long-term (short-term: ~7.6% of the total in CY25; CY24: ~69.1%), mostly on seven-year tenors with two-year grace periods, priced at 3M KIBOR plus 0.5–1.0%, and secured against store fit-outs, furniture, fixtures and current assets, with personal and corporate guarantees. The Company plans to raise up to PKR 8.3bln through a pre-IPO placement and IPO, when successfully executed, would provide additional equity funding and could support capitalization and leverage. Equity of PKR 7.5bln was flat as profit retention was offset by dividends (~69% of CY25 profit; ~103% in 6MCY26).