PACRA Maintains the Entity Ratings of Reliance Cotton Spinning Mills Limited

The ratings incorporate the eminent position of Reliance Cotton Spinning Mills Limited (“Reliance Cotton” or “the Company”) in the spinning segment of Pakistan. The Company derives strategic support from its association with the Sapphire Group (“the Group”), a well-diversified conglomerate with a strong presence across the textile value chain, with interests in retail, dairy, and energy segments. Reliance Cotton is renowned nationally and internationally for its high-quality yarn, offering a range from 6 Ne to 80 Ne, including single & double yarns, plied, slubs, mélanges, and blends. Reliance Cotton has an established and diversified customer base spanning over international markets—including America, Australia, Africa, Asia, and Europe—and is trusted by major textile and export garment manufacturers within the local markets. The current installed capacity is 59,232 spindles.
The economic environment in Pakistan during late FY25 and 1HFY26 showed signs of improvement, reflected in lower interest rates and a relatively stable exchange rate. However, the textile industry continues to face challenges from high energy costs, elevated taxation, and limited domestic cotton supply. In response, management is focused on renewable energy sources and synergies through group restructuring. These initiatives, combined with prudent capital allocation and a well-diversified investment portfolio, are expected to support resilient, long-term growth. During FY25, the Company recorded a marginal revenue growth of 5.3%, reaching PKR 15.8bln (FY24: PKR 15bln; 6MFY26: PKR 7.3bln). The revenue composition reflects a strategic shift from a predominantly export-oriented base to local sales, which constituted ~82% of the total gross sales. This transition underscores the Company’s focus on more favorable local price dynamics, strengthening its domestic market footprint.
The Company maintains a supportive business risk profile, reinforced by a stable cushion from investment income. As of Dec'26, Reliance Cotton holds an investment portfolio of PKR 3.2bln, primarily in the subsidiaries and associated companies of the Sapphire Group. Its subsidiary, Sapphire Electronics, is engaged in the manufacturing and assembly of Samsung-branded products and home appliances. The Company maintains a moderately leveraged capital structure with a well-managed working capital, supplementing the financial risk profile. Cash flows and coverage metrics are considered adequate. Currently, a group-level restructuring is underway to streamline operations and enhance organizational efficiency.
The ratings depend on consistent improvement in the Company’s profitability. Prudent administration of the investment book continues to hold importance. The sustainability of coverages and stable generation of cash flows from core consolidated operations remain critical for the assigned ratings.

About the Entity
Reliance Cotton Spinning Mills Limited (“Reliance Cotton" or "the Company") was incorporated as a listed company in 1991 under the umbrella of Sapphire Fibers Limited & Mills. The Company started its operations in Jul-92 and is exclusively engaged in the spinning business. A major stake of 80% is held by the Sponsors - the Sapphire Group through associated companies. Directors hold (4.4%) stake, and Financial Institutes and Joint Stock Companies hold (5.3%) stake of the Company. While the remaining stake of (10.3%) is held by the general public. The Board is chaired by Mr. Shahid Abdullah, while, Mr. Shayan Abdullah serves as the CEO. He is assisted by a team of professionals.