PACRA Downgrade Entity Ratings of Maqbool Textile Mills Limited.

The rating decision of Maqbool Textile Mills Limited (“MTML” or “the Company”) reflects its weakened business fundamentals, which have negatively affected its financial risk profile. The downgrade is primarily attributable to recurring losses in the preceding years, which have substantially eroded the Company’s equity base, resulting in liquidity pressures. The Company witnessed operational losses during FY25 and 3MFY26 due to elevated input costs. MTML primarily engages in the spinning segment, producing CVC yarn, PC yarn, PV yarn, and PP yarn. With minimal product diversification and diminishing margins, the Company remained vulnerable to market fluctuations, contributing to a decline in its market share in recent years.

MTML encountered significant challenges, resulting in a persistent decline in revenue base over the years, with ~30% decline witnessed during FY26 and ~18% during FY25. The Company’s reliance on short-term borrowings to bridge the funding gap and intake of additional long-term debt during the year resulted in a highly leveraged company profile. The debt and interest coverage witnessed a decline due to an elevated total debt profile and diminished cash flows, despite the monetary easing during the year. The Company continues to face equity pressures, with erosion reaching 34.7% during FY25, while ROE remained deeply negative at -46.8% in 3MFY26 (FY25: -42.2%). Reliance on external funding, including recurring capital injections by sponsors, to operationally support the Company depicts its weakened business profile.

The Company’s interest coverage remained low with a declining trend, indicating the limited ability to meet interest obligations from operating profits. Furthermore, the Company’s financial risk profile remains pressured due to diminishing current ratio and stressed credit quality metrics. Rationalization of funding structures and implementing a strategic plan to strengthen the business fundamentals remain vital.
The ratings depend on the Company improving its business volumes and core profitability, maintaining capacity utilization, generating sufficient cash flows, and recovering coverage ratios. Improvement in the current debt matrix remains crucial.

About the Entity
Maqbool Textile Mills Limited (“MTML” or “the Company”), incorporated in 1989, is a public listed company. The Company has an installed capacity of 82,224 spindles and 576 MVS spindles. MTML is primarily owned by the Maqbool family (75.20%) and others (24.8%). The board comprises ten members. Out of this, four directors are non-executive, three directors occupy executive roles, and three directors are independent. Seven board members represent the Maqbool family. Mr. Mian Tanvir Ahmed Sheikh, the CEO, carries with him extensive experience in the textile sector and is supported by an experienced management team.