PACRA Maintains Entity Ratings of Kassim Textiles (Pvt.) Limited

The assigned ratings of Kassim Textiles (Private) Limited (“the Company” or “KTL”) reflect its status as the flagship entity of the Machiyara Group. The Group has an enduring presence in the textile and allied industries, as well as in several other sectors. The Company operates with 30,624 spindles, 3,304 rotors, and 364 looms. Over the years, the Company's topline has shown consistent growth. The Company produces a variety of fabrics and yarns with multiple counts ranging from 6s to 16s, including dyed yarn, to augment its product slate and fulfil client requirements. In terms of segment-wise business contribution, fabric is KTL's top-performing segment, followed by spinning, while the direct export category is entirely led by fabric sales. The Company maintains a stable customer base both locally, with a presence in Karachi and Lahore, and internationally, including exports to Turkey, Bangladesh, Cambodia, Greece, and other locations. The Company owns a wholly-owned subsidiary named Kassim (Private) Limited, established to enhance business diversity by moving down the textile value chain into garment manufacturing, specifically jeans production. The company has gradually optimized energy costs by installing a solar power plant and utilizing other energy-efficient alternatives. However, no major CAPEX is anticipated in the coming year. An increase in volumetric sales to achieve economies of scale, coupled with gradual improvements in product pricing and measures to adopt efficient energy sources, has resulted in an improvement in margins. The SAP implementation is in process which expects to beef up the reporting framework and control environment of the Company. The financial risk profile of the company is considered adequate, with stretched working capital management reflecting industry norms. However, in some export destinations, improved trade conversion lead times are expected to provide a cushion for the company's cash flow management. Textile exports of the country reached USD 16.7bln in FY24, a slight increase from USD 16.5bln in the previous year, reflecting a growth of 0.93% YoY. The highest contribution came from the composite and garments segment at USD 9.1bln, followed by the weaving segment at USD 6.5bln, and the spinning segment at USD 1.0bln. In FY25, the transition from the final tax regime to the normal tax regime is set to impact the profitability of export-oriented units, with a 29% tax on profits and an additional super tax of up to 10%. The consistent decline in policy rates over the last two quarters, along with the anticipation of further reductions, is expected to provide a cushion in the financial metrics of the industry.
The ratings depend on the company's ability to sustain its business profile by maintaining profitability and margins from core textile operations while expanding business volumes. Increase in business volume and growth in revenue and profits would have positive impact on ratings.

About the Entity
Kassim Textiles (Private) Limited was incorporated on August 27, 1991, as a private limited company. It is a modern weaving unit that manufactures Denim fabric used for local and branded garment industry. The Company belongs to a prominent business venture of Machiyara Group. Apart from Kassim Textiles, the Group has a presence in textile, construction, real estate development, mobile phones, trading, etc. Kassim Textile’s Board comprises four members, all are sponsors. The position of Chairman and CEO vests with Mr. Muhammad Shabbir. He belongs to the sponsoring family, possesses textile expertise, and has a future-oriented region for the Company. He has been associated with the association for 3 decades. He is assisted by a professional and long-associated management team.