PACRA Maintains the Entity Ratings of US Apparel & Textiles (Pvt.) Limited

The ratings of US Apparel & Textiles (Private) Limited ("US Apparel" or "the Company") reflect its prominent positioning within Pakistan's export-oriented textile landscape, primarily engaged in the manufacturing and export of ready-made garments. US Apparel operates as a wholly owned subsidiary of AJ Holdings (Private) Limited, a diversified conglomerate with decades of industry-specific and cross-sectoral experience, providing it with a formidable competitive foundation, underpinned by deep market knowledge and robust financial muscle. In a deliberate strategic initiative, the Company has established US Workwear as an independent operating business unit, purpose-built to serve the specialized and high-barrier workwear market. This vertical has been conceived and structured as a distinct commercial proposition separate from the Company's mainstream apparel operations. To support its operations and decision-making processes, the Company has implemented an Oracle-based ERP solution, facilitating comprehensive Management Information System (MIS) reporting. The board’s composition reflects a dominant family-oriented structure with significant representation from the sponsor family, while the inclusion of independent directorship would further strengthen the overall governance framework.
During FY25, Pakistan's textile exports reached USD 17.9bln, a modest rise from USD 16.7bln the previous year, reflecting a 7.2% year-over-year growth. The textile and apparel sector recorded approximately USD 3.21bln in exports during July–August 2025. As per the management's representation, the Company's topline demonstrated robust growth. This growth trajectory is predominantly export-driven, with export revenues constituting most of the total revenue, while the local market contributed a minimal portion. Geographically, the Company's export base is well-diversified across the United States, the United Kingdom, and continental Europe.
While revenues expanded significantly, profitability indicators showed some weakening during the period, primarily reflected by upward revisions in the minimum wage rate and rising inflation across the cost base. These pressures cascaded through the P&L, compressing the operating profit margin. The principal contributors to the elevated burden were the transition of export-oriented units from the Final Tax Regime to the Normal Tax Regime and the labor-intensive segment costs, collectively resulting in a heightened effective taxation and input cost burden for the period.
The Company remains conservative towards external financing and relies predominantly on internal funds. The financial risk profile is characterized by a low-leveraged capital structure and a robust equity base. As of FY25, total equity strengthened appreciably, reflecting consistent profitability retention. The current ratio also appreciated, indicating elevation in short-term liquidity. FCFO moderated, primarily driven by a contraction in EBITDA, though robust coverage ratios persist.
The rating action reflects the Company's strong and growing topline, a low-leveraged capital structure, an adequate working capital structure, and sufficient cash flow generation underpinned by a stable ownership structure and the enduring financial muscle of the sponsoring Group. Key rating considerations include the monitoring of core profitability trends and the trajectory of related-party borrowings.

About the Entity
US Apparel & Textiles (Private) Limited was incorporated on February 18, 1987, as a private limited Company. It is principally engaged in the manufacturing and export of ready-made garments. Mr. Hafiz Mustanser is the CEO designate. He has over two decades of professional experience in the textile industry.