Prosperity Weaving Mills Limited ('PWML' or 'the Company') was incorporated on November 20, 1991, under the Companies Ordinance, 1984 (repealed with the enactment of the Companies Act, 2017) as a public limited company.

PWML has been associated with the Nagina Group ("the Group") since its inception. The Group was founded by Mr. Enam Shaikh Ellahi (late) with the establishment of Nagina Cotton Mills Limited (NCML) in 1967. It has a presence in the spinning sector through Ellcot Spinning Mills Limited and NCML. The registered office of PWML is located at Nagina House, 91-B-1, M.M. Alam Road, Gulberg-III, Lahore.

The principal activity of the Company is the manufacturing and sale of woven cloth. PWML operates with 382 air jet looms and has installed Benninger Zell warping and sizing machines for producing home furnishing greige fabric. The Company has a total energy requirement of 6.4MW, which is met through a mix of 63% gas, 28% furnace oil, 5% LESCO and 4% solar power. The Company’s production facility is located in the vicinity of Sheikhupura.

The majority stake (87.49%) of the Company is held by Nagina Group, through the group companies (30.19%) and sponsoring individuals (57.30%). The remaining shareholding rests with the general public (0.68%) and financial institutions (11.84%).

The ownership structure of the Company remains unchanged, with considerable positions held by the Ellahi family. The Nagina Group has a structured line of succession, ensuring an equal distribution of shareholding among the Ellahi brothers and their family members. The third generation is already actively involved, serving in various capacities.

The Ellahi family, operating under the Nagina Group for over five decades, has established a long-standing and successful track record in the textile sector. The Group, one of Pakistan's oldest medium-sized textile houses, demonstrates a deep understanding of industry dynamics and an ability to navigate various economic cycles, leading to significant expertise in spinning and weaving, and to successfully expand its capacity despite the competitive nature of the textile industry.

Nagina Group comprises three listed public limited companies, namely, i) Ellcot Spinning Mills Limited, ii) Prosperity Weaving Mills Limited and iii) Nagina Cotton Mills Limited, and six private limited companies, i) Monell (Pvt.) Limited, ii) Icaro (Pvt.) Limited, iii) Haroon Omer (Pvt.) Limited, iv) Ellahi International (Pvt.) Limited, v) ARH (Pvt.) Limited and vi) Pacific Industries (Pvt.) Limited.

Prosperity Weaving's board comprises ten members out of which six are non-executive directors, one director carries the executive role, and three are independent directors. Mr. Shahzada Ellahi Shaikh is the Chairman.

The Company's leadership is anchored by Chairman Mr. Shahzada Ellahi Shaikh, who brings over 48 years of experience in the textile industry and holds a bachelor's degree in economics and international relations. This deep industry knowledge is complemented by the diverse skill sets of the other board members, who collectively provide a wealth of expertise and varied experience to guide the Company's strategic direction.

Three committees: audit, executive, and human resource & remuneration, are in place to assist the board in relevant matters and ensure proper oversight. The board meetings are held quarteerly to discuss the current Company performance and updates on projected targets. The meeting minutes are documented properly. The Sponsors play an active role and provide guidance to the management in the Company's operations.

M/s. Yousuf Adil, Chartered Accountants, serve as the external auditors of the Company. The firm is listed in the A category on the State Bank of Pakistan's panel of auditors and has expressed an unqualified opinion on the financial statements of the Company for FY24.

The organizational structure of the Company is divided into various functional departments, namely: (i) marketing, (ii) finance, (iii) administration & HR, (iv) accounts and (v) commercial (fixed asset procurement). To ensure a streamlined supply chain, the procurement of raw materials is centralized at the group level, with a significant portion of yarn being sourced from within the group's network of companies.

The management team is headed by the CEO, Mr. Raza Ellahi, who holds a graduate degree in Economics. He is well-versed in the textile business, providing the requisite acumen. He is supported by a team of seasoned professionals, including Mr. Syed Mohsin Gilani (FCA), company secretary & director finance, who has over three decades of financial management expertise; Mr. Shahid Rassal, the technical director, with more than 32 years of experience in mechanical engineering and operations; and Mr. Muhammad Atif Anwer, the director of marketing, who has 24 years in marketing and sales. Mr. Muhammad Tariq Sheikh, serving as the Company’s CFO, has been associated with the Company since 1999. The team's collective expertise provides a robust foundation that fortifies the Company's strategic vision and ensures sustained operational excellence.

The management meetings are held daily with follow-up points to resolve or proactively address operational issues, if any, eventually ensuring a smooth flow of operations. The Company’s MIS can be classified into three categories based on the reporting periodicity – daily, weekly and monthly. The daily and weekly reports are generated for top management with the main focus on the production and liquidity position of the Company. Whereas, on a monthly basis, the Company’s P&L is presented and discussed in the meetings.

Prosperity Weaving Mills Limited has implemented Oracle Oracle-based ERP solution with five operational modules, including i) order management, ii) procurement, iii) inventory, iv) fixed assets and v) cash management. The Company is also equipped with a "Treasury Management System", bringing efficiency to treasury transactions. This software keeps records and provides various analytical reports about the Company’s export and import quantities, trade business with banks, outstanding forward contracts’ bookings and periodic exchange rates.

PWML is accredited with international certifications for compliance. The Company is following the latest Quality Assurance Standards for fabric production and trade. The certification includes ISO 9001:2008, Global Organic Textile Standards, and Organic Content Standard. In order to ensure better productivity and compliance with relevant certifications the plants are regularly inspected.

During MY25, approximately 24.4mln MT of cotton was produced globally, compared to about 24.2 million MT in MY24. Throughout the year, low cotton production was observed in India and Pakistan. However, this was partly offset by increases in cotton production in China, the United States, and Brazil by roughly 9.7%, 19.4%, and 15.7%, respectively. China remains the largest producer and consumer of cotton worldwide (MY21-25). Pakistan's cotton output declined by approximately 30.7%, due to reduced cultivation area and a surge in duty-free imports of cotton and yarn, which disrupted domestic markets. Conversely, cotton imports increased by around 234.0% YoY during the same period to satisfy domestic demand (FY24: roughly 70.0% YoY decline). Cotton arrivals for FY24-25 totaled to about 5.5mln bales. The target for cotton production in FY26 is set at approximately 10.2mln bales.  

The sector's rising dependence on imported cotton poses a supply-side risk. During the FY25 ended, imports accounted for approximately 35% of the cotton supply (~11% in FY24), adding about USD 1.27bln (USD 448mln in FY24) to the country's import bill. Textile exports reached USD 17.9bln in FY25, a modest rise from USD 16.7bln the previous year, reflecting a 7.2% year-over-year growth. The largest contribution came from the composite and garments segment, at USD 14bln, which included the weaving segment at USD 1.8bln and the spinning segment at USD 0.7bln. The production of cotton cloth in FY25 declined by approximately 0.7% year over year, reaching around 877.1mln square meters. During FY25, about 25.3% of the cotton cloth produced was exported (compared to roughly 27.2% in FY24), with the rest used for the domestic market. The country's fabric exports fell by approximately 4.4% on YoY basis in FY25 (FY24: up about 5.8% on YoY basis), with approximately 23.4% of Pakistan's cotton cloth exports going to Bangladesh (compared to about 19.9% in FY24), followed by the USA with about 8.1% of cotton cloth exports (approximately 7.8% in FY24).  

In FY25, the transition from the final tax regime to the normal tax regime is expected to affect the profitability of export-oriented units, with a 29% tax on profits and a super tax of up to 10%. The recent removal of GST exemption (Finance Bill, 2025) on textile inputs for exporters registered under the Export Facilitation Scheme (EFS) will offer tax protection and create a level playing field for domestic cotton and yarn producers. Currently, international cotton prices are higher than the price of locally produced cotton. The gap has widened to approximately 9.8 cents per pound (as of July 18, 2025), resulting in an average increase of about USD 36.8 per bale of imported cotton. A greater reliance on imported cotton could lead to higher raw material costs, ultimately impacting yarn prices and profit margins for the sector. Conversely, energy and finance costs are expected to stay within a range, given the projected reduction in interest rates and the absence of any major energy tariff increases.  

While the sector continues to demonstrate resilience on the export front, the margin outlook for FY26 appears challenging. Upstream segments such as spinning face greater downside risk from raw material inflation, while vertically integrated composite units with stronger export linkages are better positioned to defend profitability. Overall, the sector hinges on the ability to secure a stable cotton supply chain and navigate upcoming fiscal adjustments. Without structural improvement in domestic cotton production, earnings volatility is likely to persist.

The Company's market position is significantly enhanced by its association with the Nagina Group, a well-established entity with a long history of operations in Pakistan's spinning and weaving sectors. On a standalone basis, the Company maintains one of the highest market shares in the local weaving industry. This leading position is supported by its robust operational capacity, which includes 382 air jet looms.

During FY24, the Company’s revenues increased by 27.9% YoY to PKR 18,746mln (FY23: PKR 14,655mln), mainly attributable to improved pricing. As of end-Mar 9MFY25, the Company’s topline stood at PKR 14,230mln (9MFY24: PKR 14,028mln), reflecting a modest YoY growth of 1.2%. The sales mix remains skewed towards the local market, contributing 70%, while exports account for the remaining 30%.

During FY24, the gross margin decreased to 6.3% (FY23:7.5%), translating into lower operating margins of 3.3% (FY23: 4.0%). The finance cost increased by 26% to PKR 409 mln (FY23: PKR 326mln). Consequently, the net profit declined to PKR 87 mln (FY23: PKR 138mln). As of 9MFY25, the gross margin remained relatively stable at 6.5%, while the net margin improved to 0.7%, primarily due to a decline in finance cost to PKR 207mln.

The Company’s business strategy emphasizes maintaining an optimal balance between local and export sales, while actively pursuing cost-reduction opportunities to enhance value through sustainable profitability and stable market growth. Management remains focused on aligning financial performance with projected topline and profitability targets. Following the challenges encountered in FY25, profitability has improved, primarily driven by a reduction in finance cost, which has provided financial relief and strengthened the Company’s overall performance.

The Company’s working capital requirement is a function of inventory and receivables, for which the Company relies on a mix of internal cash flows and short-term borrowings. At end-Mar25, the company’s reliance on STB declined to PKR 984mln (end-Jun23: PKR 1,024mln). The net working capital cycle decreased to 51 days (end-Jun24: 54 days) on the back of the decreased inventory days. The Company recorded a decrease in the trade assets, clocking in at PKR 2,975mln (end-Jun24: PKR 3,412mln). The room-to-borrow also decreased to PKR 1,612mln (end-Jun24: PKR 1,915mln).

During FY24, the FCFO increased by 15% to stand at PKR 744mln (FY23: PKR 649mln). The total finance cost paid was increased to PKR 443mln (FY23: PKR 174mln), resulting in a decline in interest coverage to 1.5x (FY23: 3.0x). The debt payback capacity increased to 5.9 years (FY23: 5.7 years). During 9MFY25, the Company experienced a decline in FCFO, clocking in at PKR 510mln (9MFY24: PKR 609mln) due to increased taxation. Moreover, Lower finance costs paid (9MFY25: PKR 239mln, 9MFY24: PKR 363mln) led to an increase in interest coverage (9MFY24: 2.6x; 9MFY24: 2.1x).

At end-Mar25, the Company's leverage decreased to 54.3% (end-Jun24: 57.6%). The equity base largely remained intact at PKR 2,404mln (end-Jun24: PKR 2,329mln). Total borrowings have decreased to stand at PKR 2,857mln (end-  Jun24: PKR 3,167mln). ST borrowings constitute 34.5% of total borrowings.