Saif Textile Mills Limited ('STML' or 'The Company') was incorporated in 1989 as a Public Limited Company and is listed on the Pakistan Stock Exchange (PSX).

Saif Textile has been associated with the Saif Group since its inception. The Group has a presence in the spinning sector through Kohat Textile and Mediterranean Textile. The Company’s production facilities are located in the Gadoon Industrial Estate, KPK.

The Company engages in the manufacturing and marketing of diverse yarn varieties, including accrue yarn, mélange yarn, dyed yarn, and surgical cotton. It operates with a total of 105,744 ring spindles and 19 doubling machines, achieving an annual production capacity of 14.81 million kilograms. Additionally, the Company has a dyeing unit with a production capacity of 17 tonnes per day. At full capacity utilization, the company’s total energy requirement is 11 MW, sourced as follows: 8.5 MW from gas, 1.7 MW from the grid, and 0.8 MW from solar power.

Saif Group, via its holding entity Saif Holdings, maintains a controlling stake in Saif Textiles. This control is enabled through a 49.58% shareholding in the Company. Other significant shareholders include the State Life Insurance Corporation of Pakistan (3.90%), and NIT (5.80%), while the remaining 40.72% constitutes the free float.

The Group has established a holding Company structure with equitable shareholding among all Saif brothers, signifying a formalized and coherent succession framework. However, the transfer of ownership to the next generation has not yet been documented.

The sponsors have maintained a presence in the local spinning industry for over five decades, during which they developed deep operational expertise. Although the Group’s expansion within the textile sector remained modest, it demonstrated resilience by sustaining operations through periods of significant volatility, particularly within the spinning segment. Mr. Assad Saifullah Khan is regarded as a key figure in driving strategic execution and delivering results at critical junctures.

The Group is one of the prominent industrial and services conglomerates in Pakistan. It has a notable presence across diverse industry segments, including power, textiles, oil and gas exploration, real estate, information technology and communication, and healthcare, through seven subsidiaries and four associated companies. The Group’s strong financial position demonstrates its ability to support Saif Textile in times of need, as evidenced in the past.

The Board of Directors of Saif Textile Mills Limited comprises eight members, including the Chairman, Mr. Javed Saifullah. The board includes six non-executive directors and two independent directors.. There have been two recent changes in the board composition. Mr. Rashid resigned as a director, and Mr. Khalid Siddiq Tirmizey was appointed as new independent director on May 22, 2025. Additionally, Mr. Rana Muhammad Shafi replaced Mr. Sohail Hussain Hydari as a director on May 23, 2025. The Company's board is dominated by sponsor family representatives. Most of the directors have been associated with the board for a reasonably long time.

Mr. Javed Saifullah Khan is the Chairman of the Company, succeeding Mr. Osman Saifullah Khan, who now serves as a Director. Mr. Javed Saifullah Khan holds an MBA from the University of Pittsburgh and brings over four decades of extensive experience to the role. Mr. Osman Saifullah Khan holds a Master's degree in Engineering and Management and has 28 years of broad experience. Ms. Hoor Yousafzai is a qualified Chartered Accountant and serves as a Director. She has been associated with Saif Textile Mills Limited for 18 years. The other board members possess substantial and diverse expertise.

During FY24, the Company held six meetings of the Board of Directors. Board meetings have adequate attendance of directors. The board meeting minutes were appropriately recorded. Meanwhile, the overall strategy of the company is discussed in the bi-annual group meeting of Saif Group, whereas day-to day operations are discussed in board meetings. For effective oversight and compliance with the code of corporate governance, the board has formed two board committees namely i) Audit Committee and (ii) Human Resource & Remuneration Committee.

M/s ShineWing Hameed Chaudhri & Co., Chartered Accountants, are the external auditors of the Company. The firm is included in the SBP’s panel of auditors under Category 'B'. They have expressed an unqualified opinion on the financial statements for the year ended June 2024.

The Company operates with a lean organizational structure, wherein departmental heads report directly to the Executive Director of Finance and Operations, who in turn reports to both the CEO and the Board of Directors.

On May 15, 2025, Mr. Sohail Hussain Hydari tendered his resignation from the position of CEO. The Board appointed Mr. Assad Saifullah Khan as the new CEO. He brings 18 years of experience in the textile industry and has been associated with the Company for 17 years. He is also currently serving as the CEO of Kohat Textile Mills Limited. Additionally, Mr. Muhammad Waseem Aslam replaced Mr. Luqman as CFO in January 2025, bringing nearly two decades of experience to the role.

There is no formal management committee, however, the Company maintains an adequate IT infrastructure and related controls. Additionally, a delegation of authority matrix by sponsors to management is considered positive for management effectiveness.

Saif Textile has implemented Microsoft Dynamics-based ERP solutions with twelve operational modules including (i) Payable, (ii) Receivable, (iii) Inventory, (iv) Procurement and sourcing, (v) Sales & Marketing, (vi) General Ledger, (vii) Fixed Assets, (viii) Cash and Bank Management, (ix) Product Information Management, (x) Organization Administration (xi) System Administration and (xii) External Asset Management. This system, while integrating the business functions of the company, helps the management in decision-making by collecting information timely. Moreover, all the IT departments of Saif Group are centralized.

The Company adheres to several quality assurance standards, including OEKA TEX 100, ISO 9001:2008, ISO 14001, Global Organic Textile Standards, and Supima. The Company maintains an effective internal audit department that enhance risk management, control, and governance processes. The department is comprised of a dedicated team led by an internal auditor.

The textile exports of the country reached USD 16.7bln in FY24, a slight increase from USD 16.5bln in the previous year, reflecting a growth of 0.93% YoY. The highest contribution came from the composite and garments segment at USD 9.1bln, followed by the weaving segment at USD 6.5bln and the spinning segment at USD 1.0bln. During 8MFY25, the textile exports stood at USD 12.2bln. Pakistan's exports to the USA were USD 4.02bln in FY24 and USD 2.83bln in 8MFY25. Recently, the USA imposed a 29.0% tariff on Pakistani exports. The subsequent impact on the broader dynamics of Pakistan's textile industry, as well as the adaptability of textile manufacturers, will be assessed in due course.

The Company’s association with the Saif Group strengthens its position in the local spinning industry. However, on a standalone basis, the Company’s share in the local spinning industry is considered adequate.

During 9MFY25, the Company net revenue declined to PKR 8,693mln (FY24: PKR 12,249mln, 9MFY23: PKR 9,563mln), reflecting a 9% decrease from the same period last year. This was driven by increased yarn imports under the EFS scheme, which constrained market liquidity for local spinners, alongside a downward trend in international cotton prices that led to lower yarn prices. The majority of the Company’s revenue is derived from local yarn sales, with a significant portion attributed to Accru yarn. The Company’s export markets include Brazil, Uzbakistan and Italy. However, the contribution of exports to total sales remains minimal, with total exports amounting to PKR 477mln in FY24. Accru yarn is the Company’s leading product, contributing approximately 90% of total sales, while the remaining 10% is generated from the other yarn types.

The margins are under stress due to the Company curtailed its capacity to access market-based liquidity during a period characterized by severe market illiquidity, influenced by weakened local demand for yarn and reduced operational cash flows.. Additionally, a rise in gas prices further strained margins, resulting in a reduction of gross margins to 11.2% (FY24: 14.6%). Following these, the net profit margin fell on the negative side and stood at -4.2%, contrasting with a net Profit margin of 0.1% in FY24 and 0.8% in 9MFY24. The Company recorded a net loss of PKR 367mln during 9MFY25; however, a gradual reduction in the policy rate, along with the management's strategic intent to diversify the product mix by shifting towards finer yarn counts (100s and above), is expected to cater to high-value niche segments and enhance profitability.

Following the recent reduction in electricity prices, the Company has shifted a major portion of its energy consumption to electricity. In pursuit of a sustainable renewable energy solution, STML is currently in negotiations with lender banks for the installation of an 8MW solar power plant, with an estimated project cost of PKR 750mln. Further, the Company is investing PKR 1.5 bln to expand its dyeing capacity from 17 tons per day to 27 tons per day. 

During 9MFY25, the company's net working capital days increased to 158 days, compared to 129 days in FY24. This increase is mainly due to an increase in inventory days, which increased to 118 days from 96 days. The company primarily funds its working capital requirements through short-term borrowings from conventional banks and an unsecured running finance facility from the sponsoring Company of  PKR 1.5bln. The short-term trade leverage of the Company stood at 9.6% depicts adequate room to borrow. 

In 9MFY25, the Company's free cash flow from operations (FCFO) reached PKR 936mln, down from PKR 1,537mln in FY24, driven by the decline in profitability. Short-term borrowings increased to PKR 4,611mln from PKR 4,599mln in 9MFY25. Interest coverage stood at 1.0x and debt coverage at 0.8x. Moving forward, the improvement in coverages and overall credit quality metrics remains essential. 

During 9MFY25, the Company's leverage ratio increased to 66.5% from 64.1% in FY24 and 61.4% in 9MFY24. The equity base has also shown a downward trend over the last year due to losses after tax, standing at PKR 3.7 bln in 9MFY25 compared to PKR 4.1 bln in FY24. Strengthening the equity base will remain vital moving forward. The sponsor’s support, totalling PKR 2.1bln in the form of long-term subordinated loans and short-term working capital lines, remains critical to the sustainability of the Company’s financial risk profile.