PACRA Maintains the Entity Ratings of Basfa Textile (Pvt.) Limited

The assigned ratings of Basfa Textile (Pvt.) Limited (“BTPL” or “the Company”) reflect its operating footprint within Pakistan’s spinning sector, underpinned by a moderate production scale and adequate financial flexibility. The Company operates with an installed capacity of 60,156 spindles, primarily producing viscose and cotton-based yarn. BTPL’s demand remained closely linked to the performance of downstream value-added exporters, resulting in intermittent softness in order inflows. A key strength is witnessed in the Company’s energy efficiency strategy, anchored in its solarization initiative to cater to rising energy costs. This initiative is fully funded through internal cash flows only, underscoring the Company’s financial discipline.
During FY25, the Company recorded net revenue of PKR 4.1bln (FY24: PKR 5.9bln), driven by a strategic shift toward finer yarn counts (40s, 52s, and 60s). While this rationalization enhanced margin sustainability, it led to reduced volumetric throughput due to extended processing cycles and higher energy intensity. BTPL successfully commissioned an additional 1.2MW solar capacity, raising aggregate renewable energy capacity to 3.3MW against a sanctioned load of 5.9MW. This structural shift is expected to enhance cost efficiency and strengthen long-term competitiveness, amid persistently elevated grid tariffs. The operational recovery gained momentum in 1HFY26, with revenues augmenting to PKR 2.7bln (1HFY25: PKR 2.3bln), supported by normalization of production cycles and improved energy efficiency.
The Company’s financial risk profile is assessed as adequate, underpinned by working capital discipline and moderate leverage. During FY25, total borrowings declined, resulting in an improved leverage ratio of 34.5% (FY24: 46.9%). However, the first half of FY26 witnessed an uptick in short-term financing to support working capital requirements. The working capital cycle increased to 98 days during FY25 due to elevated inventory days. During 1HFY26, the working capital cycle compressed to 67 days, driven by inventory rationalization and an advance-based sales model. Governance and management practices are considered adequate for the Company’s operating scale, supported by sponsor oversight, long-tenured management, and clear functional segregation. Nonetheless, institutional strengthening through ERP implementation, enhanced board independence, and formalized governance frameworks remains a key medium-term priority. While business concentration persists due to single-line operations, this is partially mitigated by sponsor commitment, operational continuity, and established customer relationships.
The ratings are dependent upon the management's ability to sustain their capacity utilization, generate sufficient cashflows, and maintain coverages at an optimal level. The corporate governance framework needs improvement. Adherence to the debt matrix at an adequate level is a prerequisite for the assigned rating.

About the Entity
Basfa Textile (Pvt.) Ltd (“BTPL” or “the Company”), incorporated and operational since 2006, is engaged in the manufacturing and sale of Cotton and Viscos Yarn. Mr. Babar Jahangir, the CEO/Chairman of the Company holds 44.4% shareholding and the remaining stake vests with Mr. Ahmed Jahangir (30.0%) and Mr. Fahad Jahangir (25.6%). The board comprises three sponsor family members. Mr. Babar Jahangir has been with the Company since 2008. His innovative technological skills in the field of the textile sector bring specialized and comprehensive knowledge to the board.