Liberty Mills Limited ('the Company' or 'LML') is an unlisted, public limited concern incorporated in 1964.

The Company commenced operations in 1964 as a private limited Company. Later, in 1969, its legal status was changed to a publicly listed Company. In Dec’13, the Company was delisted from the stock exchange.

The Company is in the business of manufacturing and processing textile fabrics and made-ups. It operates in two main segments: processing (dyeing and printing) and home textiles. The company has set up its backward integration units of spinning and weaving, which are fully in operation and these will enhance efficiency along with limited dependency, going forward. The Company generates electricity for its in-house consumption through captive power generation. Its manufacturing facility is located at the Sindh Industrial and Trading Estate in Karachi and Nooriabad.

Liberty Mills Limited is the flagship Company of a prominent business and renowned business conglomerate, Liberty Group. The Company's entire shareholding rests with the Mukaty Family through the individual holdings.

The absence of a formal holding company structure, coupled with the reliance on personal relationships among the key sponsors, has resulted in the lack of a clearly defined succession plan. This poses potential risks to the Company's long-term stability and operational continuity.

With over four decades of operational history, the sponsoring group has established a strong presence and deep-rooted expertise in Pakistan’s textile and energy sectors. Over the years, the Group has built a reputation for resilience, adaptability, and sectoral knowledge, underpinned by a commitment to innovation and growth. The sponsors bring with them a wealth of diversified industrial experience, having successfully led and managed ventures across multiple sectors. Their strategic insight and hands-on leadership have played a pivotal role in the Group’s sustained expansion and operational success.

In addition to its established presence in the textile and energy sectors, including wind power projects and aluminum, the sponsoring Group also has an interest in the pharmaceutical industry. The sponsors possess strong financial capacity and have demonstrated a willingness to support the Company, if needed.

The overall control of the board is vested with seven members from the Mukaty family, chaired by Mr. Muhammad Ashraf. The inclusion of an independent director will strengthen the governance framework of the Company.

The Chairman, Mr. Muhammad Ashraf, brings over three decades of extensive experience in Pakistan’s textile industry, marked by strong leadership and deep industry insight. Under his stewardship, the Liberty Group has demonstrated sustained growth and operational excellence. The board comprises seasoned professionals with diverse business exposure across multiple sectors of the country's economy. Their long-standing affiliation with the Group ensures leadership continuity and reflects a strong alignment with the Group’s strategic direction and long-term vision.

In line with best corporate governance practices, the Board has constituted two committees: the Audit Committee and the Human Resource & Remuneration Committee. Board meetings are convened regularly to review the Company's financial performance, oversee strategic initiatives, and monitor progress against established business objectives. The minutes of Board meetings are formally documented; however, there remains room for improvement.

To ensure a high standard of financial transparency and reporting integrity, the Company has appointed M/s Kreston Hyder Bhimji & Co., Chartered Accountants as its external auditors. The firm is classified in Category 'A' on the State Bank of Pakistan's panel of auditors, reflecting its recognized professional standing. The auditors issued an unmodified (unqualified) opinion on the Company's financial statements for the year ended June 30, 2025.

The Company has maintained a well-defined organizational layout to ensure the smooth flow of operations. To address the diverse operational requirements, the key areas of the Company have been segregated into ten functional departments. Each of these departments is led by an experienced head reporting directly to the Company's Chief Executive, Mr. Temoor Ashraf Mukaty.

The Chief Executive, Mr. Temoor Ashraf Mukaty, is well-versed in the textile industry and has been a member of the Company’s Board since 2015. Mr. Muhammad Ali Sadiq, a fellow Chartered Accountant, is serving as the Group Director - Finance & IT. He has been associated with the Company for a long time period. The CFO, Mr. Hasan Saleem, brings over 23 years of professional expertise and reports to the Group Director - Finance & IT. He is supported by a team of highly qualified and seasoned professionals.

Although the Company does not have formal management committees in place. The management meetings are convened to review operational performance, address key business issues, and align on strategic priorities. These meetings facilitate effective communication among senior leaders and support timely decision-making, ensuring ongoing monitoring of the Company’s progress against its objectives.

The Company has implemented Oracle Fusion for comprehensive reporting. It provides an integrated view of business processes and helps to stay at the forefront of technology in critical areas, including finance, MIS and HR, and a few others. The availability of these technologies ensures a systematic and controlled adoption process to identify any loopholes.

The Company has maintained a well-trained quality control department. The Company is ISO 9001 certified and has established an internal audit department that reports directly to the Chief Executive.

Pakistan's textile sector remains the backbone of the country's manufacturing base and export economy, with the composite and garments segment contributing a significant share to value-added textile exports. Composite textile manufacturers benefit from vertically integrated operations encompassing spinning, weaving, processing, and stitching, enabling greater operational efficiency, improved quality control, and enhanced product diversification. The industry's strategic shift towards value-added products—including home textiles, apparel, and made-ups—has strengthened export competitiveness and reduced dependence on lower-margin yarn and greige fabric exports. The operating environment has remained challenging due to elevated input costs, including raw cotton, energy tariffs, labour costs, and logistics expenses. Furthermore, fluctuations in cotton production have increased reliance on imported cotton, exposing manufacturers to exchange rate volatility and global commodity price movements. Nevertheless, the gradual easing of inflationary pressures and monetary policy has provided some relief to financing costs, while improving macroeconomic stability has supported export-oriented businesses. Demand fundamentals continue to be largely driven by exports to North America and Europe, where global retailers increasingly prefer suppliers capable of offering vertically integrated manufacturing, shorter lead times, product innovation, and compliance with environmental and social standards. Consequently, textile manufacturers have accelerated investments in automation, renewable energy, wastewater treatment, and sustainable manufacturing practices to enhance cost competitiveness and meet evolving buyer requirements. These initiatives are expected to strengthen Pakistan's position in the global value-added textile supply chain over the medium term. Going forward, the sector's performance is expected to remain contingent upon the availability of competitive energy tariffs, stability in cotton production, exchange rate movements, and sustained global demand. Companies with diversified product portfolios, established customer relationships, strong operational efficiencies, and prudent financial management are expected to remain better positioned to withstand industry cyclicality and capitalize on emerging export opportunities.

LML is considered a mid-tier player in the export of value-added products in Pakistan. The Company faces competition from several prominent players such as Sapphire Textile Mills, Kohinoor Textile Mills, and US Apparel & Textiles.

A predominant portion of the Company's revenue is generated through export sales, while domestic sales constitute only a marginal contribution to the overall topline. The Company benefits from a diversified portfolio of value-added textile products, including flat sheets, fitted sheets, twin sheets, queen sheets, duvet sets, quilt covers, baby blankets, woven sheets, patient gowns, shower curtains, knitted garments, apparel, and other made-ups. The Company's topline demonstrated robust growth, recording a three-year CAGR of approximately 17% over the period from June 2023 to June 2025. During FY25, revenue increased by 13% year-on-year basis at PKR 80.2bln (FY24: PKR 71.2bln), primarily driven by higher sales volumes across key business segments. The home textile segment remains the Company's largest revenue contributor in terms of both volumes and pricing, followed by garments and other made-up products. During 1HFY26, the Company revenue base clocked at PKR 45.3bln.

The Company's export footprint is well diversified across major international markets, including the United States, the United Kingdom, Australia, the Netherlands, Poland, Slovenia, Germany, France, Spain, and other regions. Although customer concentration among the top ten buyers remains relatively elevated, the associated risk is mitigated by the Company's long-standing business relationships with internationally renowned customers. Its key clientele includes Medline Industries, Inc., Turner Bianca PLC, ASDA Stores Limited, Target Corporation, Walmart Inc., and other leading global retailers.  

The Company's gross profit margin moderated to 13.1% in FY25 (FY24: 20.3%), primarily attributable to elevated production costs amid a challenging operating environment. The same trend extended to operating profit margin in line with the inflationary pressures. The Company's bottom line received a notable uplift from a significant increase in dividend income during the year. However, profitability remained constrained by elevated finance costs arising from the utilization of both conventional borrowings and subsidized financing facilities under the State Bank of Pakistan (SBP) schemes. Additionally, the taxation expense increased following the transition to the revised taxation regime. Consequently, the Company's net profit declined to PKR 6.2bln in FY25 (FY24: PKR 9.9bln). During 1HFY26, the Company's profitability indicators exhibited a modest improvement, with the gross profit margin and net profit margin standing at 14.6% and 6.4%, respectively.

Currently, the Company is operating a spinning unit with 11,160 rotors/spindles with a production capacity of 1,700 bags per day and Air Jet weaving unit of 145 looms having a production capacity of 100,000 meters of fabric per day in the Nooriabad location. In addition to this, the Company is also operating another weaving unit of 110 Sulzer looms in Karachi with an overall capacity of 30,000 meters of fabric per day. The total number of machines in finishing mill / wet processing are 128, having a final production capacity of 368,000 meters per day and made-ups (stitching machines: 2,995 machines). Liberty Wind Power 1 Limited and Liberty Wind Power 2 Limited (of 50 MW each) are wholly owned subsidiaries of the Company and are operational. Both the projects are supplying electricity to the National Grid.

The Company's working capital requirements are primarily driven by its inventory and trade receivables and are financed through a combination of internally generated cash flows and short-term borrowings (STBs). During 1HFY26, the Company's net working capital cycle improved to 180 days (FY25: 200 days), primarily owing to a reduction in the inventory holding period to 130 days (FY25: 159 days), reflecting enhanced inventory management. The Company maintains adequate unutilized borrowing lines with a diversified pool of banks and financial institutions, providing financial flexibility to meet its working capital requirements. Over the years, the Company has sustained a strong liquidity profile, as evidenced by a robust current ratio of 6.3x (FY25: 5.7x).

During 1HFY26, the Company's free cash flows from operations (FCFO) improved to PKR 4.0bln (FY25: PKR 3.6bln), reflecting stronger cash flow generation and prudent financial management. The improvement in FCFO, coupled with the easing of the monetary environment, supported a recovery in the Company's debt servicing capacity and strengthened its coverage metrics. Consequently, both the interest coverage and core operating coverage ratios improved during the period. Meanwhile, the Company's debt payback period remained within a manageable range.

The Company maintains a moderately leveraged capital structure, with its debt profile predominantly comprising short-term export financing facilities, primarily under the Export Refinance Scheme (ERS). During 1HFY26, the Company's total debt declined to PKR 55.6bln (FY25: PKR 64.6bln), reflecting a reduction in short-term borrowings. Consequently, total leveraging improved to 50.9% (FY25: 55.9%). The Company's risk absorption capacity improved as the equity base strengthened further toPKR 54.9bln (FY25: PKR 51.5bln), providing a solid cushion against potential business and financial risks.