PACRA Assigns Preliminary Ratings to Masood Spinning Mills Limited | PPSTS | PKR 3.0bln | TBI

The assigned ratings of Masood Spinning Mills Limited (“MSML” or “the Company”) are underpinned by the Company’s formidable presence within the competitive textile landscape. Over the years, the Company has strengthened its foothold through sustained operations and product diversification, meeting the requirements of its top clientele. The Company is engaged in the manufacturing and sale of multiple categories of yarn, fabric and socks. Lately, the Company has ventured into high potential socks segment, offering attractive margins. The socks segment offers a broader range of socks, including fashion wear, medicated socks, sports wear, and formal wear. This initiative was undertaken to capitalize on the rising demand for value-added products in the international market. The operational efficiencies in this unit have now been fully realized.

During 9MFY26, the Company achieved a topline of PKR 26.9bln (9MFY25: PKR 23.5bln). This growth was primarily driven by the management’s deliberate shift towards a more sustainable and profit-centric strategy, rather than a sole reliance on volume expansion. Consequently, the Company’s sales mix tilted towards the domestic market to reap benefits from the favorable product pricing dynamics. Additionally, the revenue from the socks segment demonstrated a notable growth. Margins remained largely intact, supported by the optimization of the overall cost structure via strategic investment in cost-efficient energy alternatives. These factors translated into improved net profitability, with PAT reaching PKR 369mln (9MFY25: PKR 189mln).

The Company maintains an adequate financial risk profile, with cash flow generation and coverage indicators remaining within manageable levels. Management remains cognizant of the elevated leverage position and has formulated a well-articulated strategy aimed at rationalizing debt levels over the medium term. In this regard, the Company is in the process of liquidating certain non-current assets and group-owned properties. Proceeds from these transactions are expected to support working capital requirements and gradually deleveraging the balance sheet.
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The preliminary ratings of the instrument derive strength from the underlying security structure, primarily anchored by the Sukuk Payment Account (“SPA”) mechanism established under the lien of the Investment Agent. The SPA will commence funding during the month preceding maturity through equal weekly contributions equivalent to one-fourth of the principal amount, thereby ensuring that the entire issue amount is available in the designated account at least two days prior to the maturity date. The principal and profit obligations will be settled through a bullet payment at the time of maturity. Furthermore, the instrument is also secured through a ranking charge over the present and future current assets of MSML, including all inventory, in addition to a cross-corporate guarantee extended by Mahmood Textile Mills Limited.

About the Entity
MSML operates as a public limited Company. The sponsors cumulatively own the majority shareholding through individuals and associated companies. Overall control of the board is vested with six BODs.

About the Instrument
MSML intends to issue a Rated, Secured, Privately Placed, Short-Term Sukuk of PKR 3,000mln (inclusive of a green shoe option of PKR 1,000mln). The purpose of the instrument is to finance the working capital requirements. It carries a markup rate of 1M Kibor+125bps with a tenor of six months.