PACRA Maintains Entity Ratings of Masood Fabrics Limited

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, Unit-I consists of 32,640 spindles and Unit-II consists of weaving operations with installed 244 air-jet looms. During FY22, the company’s top line displayed an enormous increase recorded at PKR 24.1bln (FY21: PKR 14.7bln). The sales mix tilted towards the export market attributable to a higher demand pattern for textile products during FY22. The exports comprise the sale of fabric (51.5%) and yarn (48.5%). The margins and coverages demonstrated an improvement on account of operational efficiencies. The company’s financial risk profile has reflected a comfortable position. During 1HFY23, the company’s bottom line stood at PKR 619mln (1HFY22: PKR 1.2bln) on the back of higher expenses and finance costs which is in line with the industry trend. The company’s financial risk profile witnessed a slight attrition primarily attributable to a decline in coverages. During 7MFY23, the textile exports were valued at $10.08bln compared to $10.93bln, reflecting an 8% decline YoY – the declining trend has been recorded in the last few months. The decline in exports is driven by attrition in the demand pattern of export avenues. The hike in cotton prices and low demand for yarn in international markets is also a challenge. The analysis of 5MFY23 reveals that among value-added items, bedwear has witnessed the largest decline of 19% (on an MoM basis), down to $217 million. Knitwear remained on the downward path in October 2022 and declined by 10% to $392 million. Among non-value-added items, cotton yarn has shown the largest decline of 35%. Moreover, a slowdown is prevailing in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The demand pattern is expected to improve post-Jun-23.
The ratings are dependent on the Company’s ability to prudently manage the working capital cycle, sustaining margins, and generating sustainable cash flows 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 was part of Mahmood Group till 2021, established in 1935 by entering the 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 an 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.