PACRA Maintains Entity Ratings of Mount Fuji Textiles Limited

The ratings of Mount Fuji Textiles Limited (“MFTL” or “the Company”) reflect its sustained business fundamentals, supported by a growing export-led revenue base and a diversified product slate. The Company’s product portfolio primarily comprises garments, including zippers and hoodies, as well as home textile products, primarily bedsheets. The sponsors’ continued focus on operational expansion and cost rationalization bodes well for the assigned ratings. MFTL’s international client base remains diversified across multiple export markets, with Poland, Germany, the United Kingdom, and the United States continuing to be the key destinations. The sales mix registered a shift in favor of domestic markets, with ~60% in exports during the 1HFY26 (FY25: ~80%, FY24: ~83%). The Company generated sales of PKR 10.3bln in FY25 (FY24: PKR 9.6bln). However, it recorded a slight contraction in its gross profit margin, underpinned by elevated input costs. The operating margin improved, reflecting prudent operating efficiency. The net margin ticked down to ~1.1% from ~1.2% in FY24. During 6MFY26, the Company generated sales of PKR 5.9bln, compared with PKR 5.7bln SPLY, indicating continued business traction during the ongoing year. The gross profit margin constricted to ~15.1%, compared with ~19.0% in 6MFY25 and the net margin moderated to ~0.7%, compared with ~1.3% SPLY. The decline in profitability during 6MFY26 is primarily attributable to elevated other expenses and transition towards the normal tax regime. Overall, margins remained under pressure, though the improvement in operating profitability indicates some support from better cost absorption and operational discipline. Finance costs remained contained during the period, aligning with the ongoing monetary easing observed during the review period. To mitigate energy-related pressures and improve efficiency, the Company has undertaken CAPEX, including the installation of solar panels, while further expansion through the approved dyeing facility is expected to support cost optimization over the medium term. The management remains focused on sustaining growth while improving efficiency and profitability. Governance oversight continues to rest with the sponsoring family, who remain actively involved in executive management and provide relevant industry expertise. The Company’s financial risk profile remains adequate, supported by a moderately leveraged capital structure, which is mainly skewed towards a short-term financing mix. As of 6MFY26, working capital management remained comfortable, with improved liquidity and an adequate cushion to support operations. Although profitability remained modest due to margin pressure and higher taxation, the Company continued to post positive earnings and maintain stable operations. Ongoing emphasis on process optimization, internal controls, and cost efficiency is expected to further strengthen the overall control environment. Despite sector-wide margin challenges, the Company has demonstrated resilience through steady volumes and sustained export-led operations.
The ratings are dependent upon the Company’s prudent management of working capital requirements. Improvement in coverages, sustainability of margin and sufficient generation of cash flows from core operations, while expanding business volumes remain vital. The governance framework of the Company can be improved. Adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

About the Entity
Mount Fuji Textiles Limited (“MFTL” or “the Company”) is a Public (unlisted) Limited Company incorporated in 1986. The major shareholding of the Company is owned by Mr. Ahmed Ashraf (28.57%) and the remaining is distributed between his three sons. The sponsors-dominated board comprised of four members, including the Chairman - Mr. Ahmed Ashraf, and the CEO – Mr. Abdul Latif Ashraf.