PACRA Maintains the Entity Ratings of Nishat Mills Limited

The assigned rating reflects Nishat Mills Limited’s (“NML” or “the Company”) formidable operational history and well-established business profile in the competitive textile landscape. NML is the flagship Company of the Nishat Group and ranks among Pakistan's top five textile exporters. Since its inception, NML has evolved into a fully vertically integrated textile unit, covering all aspects of the textile value chain, and has achieved operational efficiency through the adoption of cutting-edge production mechanisms and process automation. The Company has maintained a healthy equity base, which has grown over the years through the plowback of a portion of profits and revaluation gains on its strategic investment portfolio, thereby strengthening its liquidity profile. The Company has a wide range of products comprising yarn, grey cloth, processed cloth, made-ups, garments, and towels & bathrobes. In segment-wise business contribution and profitability generation, the spinning segment held an apex position in the business valuation matrix of the Company, comprising the sale of a specialized product (dyed yarn) with potentially attractive margins. During FY24, the Company has successfully commercialized the production of technical fabrics and denim business segments, aiming to capitalize on better margins and favorable pricing dynamics. The Company’s topline stood at PKR 160.2bln (FY23: PKR 141.7bln; 1HFY25: PKR 89.4bln), with ~54.0% contribution by the export segment. Europe is the Company's primary export destination, with home textiles & terry products and grey cloth being the top-selling items in this region. The Company’s top management follows a profit-centric approach, treating all operating segments as separate profit centers rather than solely relying on the topline growth. The Company has maintained a sizeable strategic investment portfolio, contributing to the profitability matrix through the generation of investment income. The Company maintained a moderately leveraged capital structure and managed its intensive working capital requirements through short-term borrowings. The Company’s cash flows and coverage metrics are considered adequate, with anticipated improvement following the gradual realization of the impact of a reduced policy rate. The ratings are supported by the Company’s association with the Nishat Group, a leading business conglomerate in Pakistan with a significant presence across diverse economic sectors, including textiles, cement, banking, insurance, power generation, automotive, hospitality, agriculture, dairy, and paper products. Textile exports to the US totalled USD 4.02bln in FY24 and USD 2.83bln during 8MFY25. Recently, the US announced the imposition of a flat 29.0% trade tariff on Pakistan; however, its implementation has been deferred for 90 days. Exports to the US contribute approximately 11.4% to NML’s topline across all operating segments. Despite the potential impact, management anticipates that the Company’s diversified geographical footprint, longstanding business relationships, and stable clientele will help sustain business volumes.
The ratings are dependent on the Company's ability to sustain business growth while generating sufficient cash flows and maintaining sound credit quality metrics. The adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings.

About the Entity
Nishat Mills Limited is a public limited Company established in 1951. The Company’s majority stake (~51%) is owned by the Mansha family through individuals and group companies. The board comprises seven members with two directors representing the sponsoring family – including the Chairman – Mr. Hassan Mansha and the CEO, Mr. Umer Mansha.