Ellcot Spinning Mills Limited ('ESML' or 'the Company') was incorporated in 1988 under the Companies Ordinance, 1984 as a public limited company. With the subsequent enactment of the Companies Act, 2017, the Company continues to operate under the revised legislative framework applicable to listed public companies in Pakistan. ESML is listed on the Pakistan Stock Exchange. The Company's manufacturing facility is located in district Kasur, Punjab.

ESML has maintained its association with the Nagina Group since its inception in 1988. Over the decades, the Group evolved from a single spinning entity into a multi-company textile conglomerate encompassing both spinning and weaving operations. This growth trajectory was achieved organically, through successive capacity additions and plant-level investments, enabling the Group to expand its spindle base and diversify across adjacent textile segments. The Company has remained under the stewardship of the Ellahi family throughout its operating history, with no material ownership transitions or structural discontinuities recorded. The Group currently includes three publicly listed companies and six private limited companies, reflecting a deliberate and phased expansion strategy sustained over more than five decades.

The Company is primarily engaged in the manufacturing and sale of cotton and polyester cotton yarn, operating through a spinning unit with an installed capacity of 79,200 spindles. Based on a 26/s count configuration, the annual production capacity stands at ~16.5 million kilograms, and the Company has achieved a capacity utilisation rate of 100.0%. The manufacturing facility is situated in district Kasur, Punjab. Total installed captive energy generation capacity stands at 21MW, comprising furnace oil (3.0MW), gas-based gensets (4.0MW), a grid connection (7.5MW), and solar (6.5MW), against an average daily requirement of approximately 8MW. The marked increase in installed solar capacity during the year (FY25: 2.4MW) reflects the Company's continued pivot toward renewable energy sources, funded through conventional loan facilities. The revenue stream is derived entirely from yarn sales, majorly by local market transactions and the remaining ~13% from direct exports. The Company serves a reputable domestic clientele while also maintaining a global customer base. To improve operational efficiency and product quality, ESML has strategically moved its production toward finer 26/s count yarn, which has reduced volumetric output but supported higher realised values per unit.

ESML is majority owned by the Nagina Group, which collectively holds 70.93% of the Company's shares through group companies and sponsoring individuals. Group companies account for 24.32% of total shareholding, while sponsoring individuals hold 46.61%, among whom Mr. Raza Ellahi Shaikh and Mr. Amin Ellahi Shaikh each hold 12.79%. Financial institutions collectively hold 23.21% of the outstanding shares. The remaining 5.85% of shares are held by the general public, constituting the free float.

The Nagina Group's stability is anchored by the Ellahi family's long-standing leadership and a clear governance structure. The Group maintains a structured line of succession, reflected in ESML's Board, where Mr. Raza Ellahi Shaikh and Mr. Amin Ellahi Shaikh serve as non-executive directors, while Mr. Haroon Shahzada Ellahi Shaikh, from the next generation, holds the position of Chief Executive Officer.

The Nagina Group is one of the older medium-sized textile houses in Pakistan, with an operating history spanning more than five decades in the spinning and weaving segments. The Group has demonstrated a consistent ability to expand capacities and navigate cyclical downturns in the textile industry, evidencing depth of sector knowledge across multiple generations of family leadership. The Group's footprint across six private limited companies and three publicly listed entities reflects a structured approach to business growth and diversification within the textile value chain.

The Nagina Group's financial structure comprises three listed public limited companies, namely Ellcot Spinning Mills Limited, Prosperity Weaving Mills Limited, and Nagina Cotton Mills Limited, alongside six private limited companies including Monell (Pvt.) Limited, Icaro (Pvt.) Limited, Haroon Omer (Pvt.) Limited, Ellahi International (Pvt.) Limited, ARH (Pvt.) Limited, and Pacific Industries (Pvt.) Limited. The consolidated presence of the Group across multiple entities in the textile sector provides a measure of financial comfort, as group-level resources can potentially be mobilised to support individual entities in periods of operational or financial stress. ESML has also maintained strategic investments in mutual funds, listed stocks, and term deposits, which stood at PKR 474mln as of 31 March 2026, providing an additional layer of liquidity that can be liquidated as and when required.

ESML's Board comprises ten directors: two executive directors (including the CEO), five non-executive directors, and three independent directors. Mr. Shahzada Ellahi Shaikh serves as the Non-Executive Chairman. This composition reflects adherence to applicable corporate governance requirements for listed public companies in Pakistan. Three board committees have been constituted to support the board's oversight mandate. 

Mr. Shahzada Ellahi Shaikh serves as the Chairman of the Board and brings 48 years of experience in the textile industry. He holds a bachelor's degree in economics and international relations. Mr. Shafqat Ellahi Shaikh is a board member with 43 years of industry-specific experience and holds a Bachelor of Arts in economics and religion from Columbia University. Mr. Shaukat Ellahi Shaikh brings 46 years of experience in the textile industry and holds a bachelor's degree in economics and political sciences. Mr. Haroon Shahzada Ellahi Shaikh serves as the Chief Executive Officer and executive director, bringing strong familiarity with the textile business through his tenure at the Company. Mr. Raza Ellahi Shaikh and Mr. Amin Ellahi Shaikh participate on the board in non-executive capacities, representing the sponsoring family's next generation of leadership. The board collectively exhibits strong sector depth, with the independent directors providing additional oversight balance required under applicable governance frameworks.

The Board has established a functional oversight structure supported by three committees, each with a defined mandate covering audit and financial oversight, executive governance, and human resource and remuneration matters. Board meetings held quarterly ensure that the Company's operational and strategic performance is reviewed at regular intervals, with action points documented and followed through. The sponsoring family plays an active role in guiding the management of the Company. The roles of Chairman and Chief Executive Officer are held by separate individuals, namely Mr. Shahzada Ellahi Shaikh and Mr. Haroon Shahzada Ellahi Shaikh respectively, maintaining a delineation between governance oversight and executive management functions.

The external audit function of ESML is performed by M/s. Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants, a firm listed in the A category on the State Bank of Pakistan's panel of auditors. The firm issued an unqualified audit opinion on the Company's financial statements for the year ended 30 June 2025 indicating no material qualifications, emphasis of matter paragraphs, or going concern modifications. The financial statements have been prepared in accordance with the applicable accounting standards and the regulatory framework governing listed entities in Pakistan.

The top-tier management positions within ESML, as with the broader operating companies of the Nagina Group including Nagina Cotton Mills Limited and Prosperity Weaving Mills Limited, are held by members of the Ellahi family. The management's control structure is channelled through a clearly defined reporting line that ensures operational accountability. The Company's organisational framework is broadly divided into seven functional departments: marketing, finance, accounts, administration and corporate, commercial covering fixed asset procurement, export, and internal audit. Decision-making follows a centralised model with the CEO and family leadership at the apex, supported by functional department heads across each operating division.

Mr. Haroon Shahzada Ellahi Shaikh serves as the Chief Executive Officer of the Company, bringing strong familiarity with the textile business and broad strategic acumen. He is supported by Mr. Muhammad Ahmad, the Chief Financial Officer, who has been associated with ESML since 2006 and carries considerable knowledge of the Company's financial operations and the wider textile sector. The management team comprises seasoned professionals across each functional department who complement the executive leadership. The long tenures of both the CEO and CFO reflect management stability. 

The management conducts meetings on a daily basis with documented follow-up points to address and proactively resolve operational issues, ensuring continuity of production and administrative functions. The Company's responsiveness to industry dynamics has been reflected in its strategic decision to shift production toward finer 26/s count yarn, which has improved realised sales values despite a challenging demand environment. Management has also pursued cost rationalisation through the ongoing expansion of renewable energy capacity, with the solar power plant upgrade from 1MW to 2.4MW representing a deliberate step toward reducing energy cost exposure. The Company's maintenance of quality certifications across multiple international standards further reflects management's commitment to product quality and regulatory compliance.

The Company has transitioned its core information system from legacy FOXPRO-based technology to an Oracle Enterprise Resource Planning solution. The Oracle ERP platform enables efficient recording of production activities, supports BAM-wise recording of warping, sizing, loom, and folding processes, and provides real-time insights that facilitate more informed decision-making at the management level. The system enhances financial management and streamlines core business operations across the Company's functional departments. Management reporting is structured across three periodicities, namely daily, weekly, and monthly, covering key performance indicators at each level and allowing timely variance identification.

The Company's internal control environment is reinforced through a dedicated internal audit department that operates as a distinct functional division within the organisational structure. The control framework is supplemented by the oversight function of the Board's Audit Committee, which provides independent review of internal controls, financial reporting integrity, and compliance matters. The Company holds accreditations under multiple internationally recognised quality and compliance standards, including ISO 9001:2008, Standard 100 by OEKO-TEX, Global Organic Textile Standards, Organic Content Standard, Organic Content Standard 100, and Organic Content Standard Blended, reflecting a structured approach to quality assurance and regulatory adherence across its manufacturing operations.

Pakistan's textile manufacturing sector, which carries a substantial weight of 18.16% in the Large-Scale Manufacturing Index, exhibited a broad-based contraction during Jun-26, with the index declining 6.67% YoY and 4.18% MoM, extending a mild 0.63% cumulative decline for Jul-June 2025-26 compared to the corresponding period last year. The weakness was most pronounced in jute goods (down 69.00% YoY) and woollen blankets (down 95.06% YoY), reflecting sharp demand attrition in these niche segments, while terry towels & bath robes and woollen & carpet yarn also posted double-digit YoY declines of 27.35% and 13.45%, respectively. Core segments showed comparatively resilient, near-flat performance, with yarn output down a modest 1.85% YoY and cloth production essentially stable (up 0.17% YoY), underscoring continued, albeit subdued, demand for base textile inputs. In contrast, the manufacture of wearing apparel — with a weight of 6.08% — despite a 13.45% YoY decline in Jun-26, registered a healthier 5.49% cumulative growth over Jul-June 2025-26, suggesting relatively better resilience in value-added, export-oriented garment production compared to upstream textile manufacturing. Overall, the divergent trends highlight ongoing pressure on primary and niche textile categories, even as downstream apparel manufacturing continues to outperform on a cumulative basis. 

ESML derives competitive strength from its association with the Nagina Group, which holds a prominent position within Pakistan's textile industry, underpinned by a long operating history and scale across the spinning and weaving value chain. On a standalone basis, however, ESML's share of the domestic spinning industry remains limited given the fragmented nature of the sector.

During 9MFY26, net sales stood at PKR 11,986mln, reflecting a modest growth of 0.6% for the period (FY25: PKR 15,886mln; up 2.4%), with local sales of PKR 10,308mln and export sales of PKR 1,678mln. The topline trend indicates a continued deceleration in growth, with export sales witnessing a notable decline; the Company followed a sales mix dominated by local revenue (86%), with exports constituting 14% during the period.

The gross margin improved marginally to 6.4% during 9MFY26 (FY25: 6.1%), while the operating margin eased slightly to 3.8% (FY25: 4.0%), reflecting the offsetting effects of improved pricing and continued cost pressure from energy and other inputs. The net margin for the period stood at 0.6% (FY25: 0.5%), constrained by a continued high effective tax incidence of 68.5% (FY25: 70.8%).

Management remains focused on protecting margins through a combination of cost discipline, targeted marketing, and continued investment in renewable energy capacity, which is expected to progressively reduce the Company's exposure to volatile grid and thermal energy costs over the medium term.

ESML funds its working capital requirements through a combination of internally generated cash flows and short-term bank borrowings. At end-Mar26, the net working capital cycle stood at 88 days (FY25: 79 days), with the increase largely attributable to a lengthening in trade receivable days to 31 (FY25: 27), partly offset by a modest reduction in inventory days to 61 (FY25: 55). The current ratio moderated to 3.0x (FY25: 3.9x), though it remains comfortably above 1.0x.

Coverage metrics improved during the period under review, with EBITDA to finance cost strengthening to 3.7x (FY25: 3.6x) and FCFO to finance cost at 2.7x (FY25: 2.6x). The debt payback period shortened to 6.9 years (FY25: 7.4 years), aided by a reduction in outstanding borrowings. Liquid cover, which captures the Company's cash, unutilized credit lines, and liquid investments relative to near-term obligations, stood at 18.3x (FY25: 17.7x), reflecting a comfortable liquidity cushion.

At end-Mar26, total borrowings reduced to PKR 3,767mln (FY25: PKR 4,684mln), with short-term borrowings almost entirely retired to PKR 23mln (FY25: PKR 779mln), reflecting a marked improvement in the Company's funding mix toward long-term financing. Consequently, leverage - total borrowings relative to total borrowings plus equity - improved to 46.6% (FY25: 52.3%). The Company's equity base increased to PKR 4,324mln (FY25: PKR 4,268mln), supported by the retention of profits.