PACRA Maintains Entity Ratings of Sargodha Jute Mills Limited

The ratings reflect Sargodha Jute Mills Limited’s (SJML) established presence in Pakistan’s jute industry, supported by its long operational history and stable relationships with key institutional customers. The Company manufactures jute products, including sacking bags, hessian cloth, yarn, twines, and related products. Pakistan’s jute industry plays an important role in the packaging of agricultural commodities, particularly wheat procured by government agencies. The sector largely relies on imported raw jute, mainly sourced from Bangladesh due to its superior fiber quality and cost competitiveness. Demand dynamics in the industry are therefore closely linked with government procurement policies, agricultural output, and export demand for jute-based products. Over time, the industry has faced structural challenges, including volatility in raw jute prices, currency fluctuations, and competition from synthetic packaging alternatives such as polypropylene bags. However, increasing global awareness regarding environmentally sustainable and biodegradable packaging materials has gradually strengthened the long-term relevance of jute products. Consequently, manufacturers in the sector continue to focus on improving operational efficiencies, diversifying product applications, and maintaining export linkages to sustain competitiveness. During FY25, the Company reported net sales of ~PKR 3,380mln, compared to ~PKR 5,162mln in FY24, reflecting a decline mainly due to lower demand for government wheat procurement bags, which historically constitute a major portion of the Company’s domestic sales. Export revenues remained relatively stable; however, overall volumes were affected by subdued demand and competitive market dynamics. The decline in margins was mainly attributable to fluctuations in raw jute prices and lower production volumes. Nevertheless, management continued to implement cost rationalization measures and operational efficiencies to support profitability. From a financial risk perspective, SJML maintains a low-leveraged capital structure, with borrowings largely comprising short-term facilities utilized to meet seasonal working capital requirements. The Company maintains a comfortable equity base backed by accumulated profits, while prudent working capital management supports its liquidity profile. The Company also holds a diversified investment portfolio, providing additional financial flexibility.
Going forward, the ratings incorporate management’s strategy to improve operational efficiencies, maintain cost discipline, and explore downstream product diversification to mitigate dependence on government procurement demand. The ratings remain dependent on the Company’s ability to maintain its market position amid evolving industry dynamics while preserving adequate profitability and a conservative financial risk profile.

About the Entity
Sargodha Jute Mills Limited, incorporated in 1981, operates as an unquoted public limited company in Pakistan. The majority shareholding is held by Mr. Parvez Aslam and his family, with operational leadership under Mr. Imran Aslam (Chairman) and Mr. Irfan Aslam (CEO). The Company commenced commercial operations in 1984.