The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Maintains Rating of Fazal Holdings (Pvt.) Limited

Rating Type Entity
(08-Nov-23 )
(10-Nov-22 )
Action Maintain Upgrade
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Fazal Holdings (Pvt.) Limited ('Fazal Holdings' or 'the Company') principally acts as the holding company for Fazal Group (herein “Group means members of the family without reference to any law of Pakistan”), maintaining strategic investments in associated companies, and also holds short-term investments in quoted and unquoted securities (trading portfolio). The Holding Company’s investment book's position, as at 9MFY23, is as follows: Trading Portfolio of PKR 5.7bln (~64% of the total investment value) and Strategic Investments of PKR 10.2bln (~36% of the total investment value) with majority of it being invested in Fazal Groups flagship company 'Fazal Cloth'. The Company has diversified its investment portfolio to mitigate risk. ~ 61% of the portfolio is invested in textile, ~15% in fertilizers, ~7% in commercial banking, ~5% in Oil & Gas, and ~9% in Power sector. The Company has designed a conservative investment policy in accordance with the Company's equity, and investments majority of its trading portfolio exclusively in blue chip shares. Fazal Holdings drives its revenue mainly from dividend income and capital gains, along with a share of profit from associates. The sponsoring Group has a prominent position in Pakistan’s corporate sector, with interests in textile, fertilizer, energy, and trading. Investment policy and Risk management are handled by the management and Director, Mr. Rehman Naseem, who sets investment management procedures and develops risk management policies. The company's portfolio has been impacted by the overall capital market downturn and after experiencing volatility in the markets for the last few quarters. Fazal Holdings has shown improvement in the performance of its trading investment portfolio, during 1QFY24, as the overall KSE100 index regains momentum.
Ratings are dependent on the management's initiative to strengthen investment decision making process and performance monitoring mechanism of underlying portfolio. The rating is supported by group substantial financial strength, portraying its ability to support Fazal Holdings if needed. At the same time, adhering to agreed financial matrix and keeping debt coverages at adequate level remains critical.

About the Entity
Fazal Holdings (Pvt) Ltd (‘Fazal Holdings’) is Private Limited Company acting as a holding company for Fazal Group. Fazal Group was incorporated in 1966 and is a renowned textile Group in Pakistan. Fazal Cloth Mills Ltd. – the flagship Company of the Group, was also incorporated in 1966. Fazal Holdings is owned by the members of the sponsoring family i.e., Fazal family. Majority of shares reside with Mr. Rehman Naseem (47.25%). Mr. Aamir Naseem Sheikh’s family owns a stake of 47.25%; through his sons, Mr. Yousaf Aamir and Mr. Abdullah Aamir, owning 22% each, in the Company. While remaining shareholding resides with Mr. Sheikh Naseem (2.5%) and Mrs. Nighat Naseem (3%).

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.