PACRA Maintains the Entity Ratings of Masood Textiles Mills Limited

The rating of Masood Textile Mills Limited (‘the Company’ or ‘MTM’) underscores the Company’s prominent business profile in the value-added textile products. MTM is a fully vertically integrated textile manufacturer, leveraging state-of-the-art production facilities and rigorous quality control standards that meet international customer requirements. Its operations span the entire textile value chain, including Spinning, Knitting, Yarn and Fabric Dyeing, Laundry, Printing, Embroidery, and Apparel Manufacturing. MTM preserves a unique sense of craftsmanship in the creation and development of high-quality knitted apparel, with a growing focus on fashion-forward garments designed for contemporary everyday wear. Its competitive edge lies in precision production, design innovation, and the ability to deliver high-quality garments across diverse product grades. Business stability is further reinforced by MTM’s long-standing partnerships with a well-diversified clientele of globally recognized and financially robust international brands. These include global industry leaders such as JCPenney, Quicksilver, Hugo Boss, Zara, Marks & Spencer, PVH, Footlocker, among others. The Company’s revenue saw a marginal YoY decline of ~2.3%, settling at PKR 58.7bln in FY24 (FY23: PKR 60.1bln; 9MFY25: PKR 44.6bln). The decline was primarily attributable to reduced sales volumes, as the Company adopted a profit-centric strategy marked by a shift in product positioning—from basic to higher-margin, fashion-oriented garments. MTM regained momentum as its previously disrupted supply chain stabilized, coupled with a gradual reduction in the policy rate, which eased cost pressures, resulting in a consolidated profit after tax (PAT) of PKR 661.7mln over the past two quarters. MTM is undertaking CAPEX to install a ~12-megawatt solar power plant in two phases, out of which ~6 megawatt will be operationalized during 2025, along with a biomass power project, to manage rising energy costs. The Company’s financial risk profile is considered adequate, though characterized by stretched working capital management and a highly leveraged capital structure, driven by intensive working capital needs that are primarily financed through short-term borrowings. The credit quality metrics of the Company are considered adequate. The textile industry is grappling with several key challenges, including evolving global demand and consumption trends, alongside mounting pressures on price competitiveness. These pressures stem from a revision in the minimum wage, elevated energy tariffs, which despite a reduction, remain high in regional comparison, reliance on imported cotton due to an 18% GST on local procurement, and the looming imposition of a 29.0% reciprocal tariff on exports to the United States, currently deferred for 90 days. The Company maintains a considerable ~43% exposure to the U.S. market. The team of MTM is in dialogue with US-based customers and trying to evolve a solution which will provide continuity to their sales
The ratings are dependent upon the improvement in profitability while expanding business volumes. The efficient utilization of short-term borrowings to induce growth in sales play a pivotal role. Adherence to the debt matrix while generating sufficient cash flows and maintaining coverages at an optimal level is a prerequisite for assigned ratings

About the Entity
Masood Textile Mills Limited is a public listed company incorporated in 1984. The board comprises seven members including the CEO Mr. Shahid Nazir Ahmad, the Chairman of the board Mr. Naseer Ahmad Shah, two independent directors, two nominee directors from Shanghai Challenge Textile Co. Limited and one from NIT.