PACRA Maintains the Entity Ratings of Ahmed Fine Weaving Limited

The assigned ratings of Ahmed Fine Weaving Limited (“AFWL” or “the Company”) reflect its adequate positioning in the weaving sector of Pakistan. The principal activity of the Company is the manufacturing and sale of grey fabric, utilizing an operational capacity of 283 air-jet looms. The Product segment includes woven fabrics for fashion, casual, sportswear, industrial, workwear, and home textiles. The ownership of AFWL rests with Mr. Ashar Fazal and his family. The sponsor’s dominance, extensive business acumen, and elevated decision power through the board’s control translate into efficient capitalization of market opportunities. During FY25, the Company’s topline exhibited a marginal decline of 4.8%, reaching PKR 7.2bln (FY24: PKR 7.6bln). The reduction primarily stems from a notable drop in export sales to PKR 1.9bln (FY24: PKR 3.1bln), partially offset by enhanced local presence (FY25: PKR 6.4bln, FY24: PKR 5.3bln). While the gross and operating margins remained relatively stable, the net margin experienced a modest rise to ~0.3% (FY24: ~0.2%), primarily due to monetary easing. The management is cognizant of energy cost risk and is in the process of optimizing its overall cost structure through the installation of a ~3.8MW solar plant, elevating the Company’s total solar generation capacity to 6.8MW. The new solar plant is expected to become operational soon, with its financial impact materializing in the following quarters.

The financial risk of AFWL is considered adequate, with a manageable working capital cycle in line with the industry. The working capital requirements are primarily met through short-term borrowings and internal cash flows, while maintaining a leveraged capital structure. The management of AFWL is mindful of aligning its performance with financial projections. The transition from the Final Tax Regime (FTR) to the Normal Tax Regime (NTR) is anticipated to establish a uniform taxation framework for all players, thereby promoting transparency. While this shift is expected to impact the profitability of export-oriented weaving units (29% corporate tax rate plus a super tax of up to 10%), the overall financial outlook for the weaving segment and the Company remains stable. This stability is supported by ongoing monetary easing, projected to offset the potential tax impact by reducing financing costs.
The ratings are dependent on the Company's ability to enhance business volumes, increase net profitability, and sustain gross margins. Prudent working capital management, positive cash flows, and sufficient coverage are imperative. Adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings.

About the Entity
Ahmed Fine Weaving Limited ("AFWL" or “the Company”) was incorporated on July 6th, 2012, as a public unlisted limited Company. Mr. Ashar Fazal holds the majority stake at 48.28%, while Ms. Laraib and Mr. Amin Fazal hold 13.25% and 36.24% of the Company's shares, respectively. The Company’s production facility comprises two weaving units. Weaving Unit I is located at Basti Malook – Multan, and Weaving Unit II is located at Qadir Pur Rawan – Multan