The Pakistan Credit Rating Agency Limited
Press Release


Iram Shahzadi

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Masood Fabrics Limited

Rating Type Entity
(30-Mar-22 )
(26-Apr-21 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - Yes

Masood Fabric Limited (‘Masood Fabric’ or ‘The Company’) is a public unlisted limited company. The Company is principally engaged in the manufacture of yarn and greige fabric, primarily catering to the home textile market. The Company maintains two separate units, spinning units of which Unit-I consists of 32,640 spindles and Unit-II consists of weaving operations with installed 244 air-jet looms. Assigned ratings take into account consistent growth in revenues, higher margins. Around three-fourths of the topline comprise export sales. The bulk of the export sales come from the export of fabric, which accounts for 65% of total export sales and 43% of total sales. The profitability of the Company has improved supported by strong margins led by operating efficiencies and positive sector dynamics. During 1HFY22, net profitability recorded a robust rise to PKR 1.2bln (IHFY21: PKR 104mln); a trend expected to continue in the upcoming quarters. The financial risk matrix remains adequate with high leveraging, marginal increase in coverage, and stretched working capital cycle. Going forward, in order to maintain the respective position of the company in such a competitive landscape, the management is planning to enhance the installed capacity of the weaving segment (expected to commence by Jul-22).
During the period July-December FY21-22, textile exports surged 26 percent YoY, fielding $9.39 billion in total export remittances, as compared to $7.44 billion in the same period last year. This is attributable to an increase in demand for textile products internationally and channeling of export orders towards Pakistani market. On a YoY basis, the exports of value-added textile items increased in both quantity and value in December 2021.
The ratings are dependent on the Company’s ability to prudently manage the working capital cycle, sustaining margins and generating sustainable cashflows from core operations. Significant deterioration in business profile leading to deterioration in coverages and/or margins may impact the ratings.

About the Entity
Masood Fabrics Limited is a venture of Masood -Roomi Group, which was established in 2021; previously it is part of Mahmood Group till 2021 which was established in 1935 by entering in tannery business, now tannery is not part of Masood-Roomi Group. Masood Roomi, provides an array of products and services for real estate, spinning, weaving, bed & bath and apparel industries. The group has annual capacity to produce 83M lbs of Yarn, 200M sq. meters of Fabric, 1.4M kgs of Towels, 7M meters of Stitched Fabric for Home Textiles and approximately 6M pieces of Knitwear and Woven Wear Apparel. Masood-Roomi Group Sponsors cumulatively own 97% directly via individuals and the remaining shareholding is owned through group companies.

Overall control vest with seven board members, all of whom are from the sponsoring family. Mr. Khawaja Jalaluddin Roomi is the CEO of the Company and has more than 30 years of experience in the textile industry. He is supported by a team of seasoned professionals who work under various sub-divisions to ensure efficiency.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.