Roomi Fabrics Limited

CREDIT RATING REPORT | Jun-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
20-Jun-25 A- A2 Stable Maintain -
21-Jun-24 A- A2 Stable Maintain -
23-Jun-23 A- A2 Stable Maintain -
25-Jun-22 A- A2 Stable Maintain -
25-Jun-21 A- A2 Stable Maintain YES
About the Entity

Roomi Fabrics Limited is a venture of Masood -Roomi Group, which was established in 2021; previously, it was part of the Mahmood Group till 2021. Overall control vests with five board members, three of whom are from the sponsoring family. Mr. Khawaja Jalaluddin Roomi is the Chairman of the Company and has more than 30 years of experience in the textile industry. He is supported by a team of seasoned professionals who work under various sub-divisions to ensure efficiency.

Rating Rationale

The rating of Roomi Fabric Limited’s (‘the Company’ or ‘RFL’) reflects the adequate profile of the Company within the textile sector of Pakistan. The Company is principally engaged in the manufacture and sale of yarn, grey fabric, home textiles, and terry towels. RFL is the flagship of the Masood Roomi Group, which comprises six entities operating under its umbrella: Roomi Fabrics Limited, Masood Fabrics Limited, Masood Apparels (Pvt.) Limited, Roomi Home (Pvt.) Limited, Masood Holdings (Pvt.) Limited, and Roomi Holdings (Pvt.) Limited. The governance framework features the active involvement of the sponsoring family, whose hands-on role and sector-specific expertise significantly contribute to the Company’s operational direction. The Company continues to rely mainly on imported raw cotton from the USA, Brazil, and Tanzania, to attain the desired product quality and meet customer requirements in the cloth, terry, and home textile segments. Nevertheless, the stability of a solid customer base bolsters the Company’s revenue stability and business continuity outlook. During 6MFY25, the Company generated a topline of PKR 14.4bln (FY24: PKR 25.3bln), primarily driven by export sales to countries across Asia, Europe, the USA, and Africa. In terms of business contribution and profitability generation, the cloth segment occupies a leading position in the Company’s valuation matrix, followed by spinning, home textile and terry. During the period under review, the Company’s profitability profile was impacted, primarily due to modest product pricing dynamics, relative stability in the USD conversion rate, elevated energy tariffs, and significant finance costs and tax burden. These factors have collectively impacted the trajectory of margins. Non-operating income derived from long-term equity investments in blue-chip entities and strategic investments in group companies has provided some cushion in the profitability matrix of the Company. The Company undertook capital expenditures (CAPEX) of PKR 7.0-8.0bln in prior years, resulting in the establishment of a production facility aimed at enhancing terry towel manufacturing capacity. This expansion is anticipated to support topline growth in subsequent periods. The Company is also expected to increase its solar energy capacity as a strategic initiative to mitigate the risks associated with rising energy costs. Currently, in response to a recent dip in industry electricity tariff, the Company shift its energy mix towards electricity. The Company’s financial risk profile is deemed adequate in light of its leveraged capital structure and stretched working capital cycle. While current cash flow generation and debt coverage indicators are assessed as adequate, there remains room for improvement. The textile industry is grappling with several key challenges, including evolving global demand and consumption trends, alongside increasing pressures on price competitiveness. These pressures arise from a revision in the minimum wage, elevated energy tariffs—which, despite a reduction, remain high in a regional comparison—reliance on imported cotton owing to an 18% GST on local procurement, and the impending imposition of a 29.0% reciprocal tariff on exports to the United States, currently deferred for 90 days. The Company maintains a minimal exposure of approximately 3% in the US market.

Key Rating Drivers

The ratings are dependent upon the Company’s ability to prudent working capital management. Improvement in coverages, sustainability of margin, and sufficient generation of cash flows from core operations while expanding business volumes remains vital. Adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Roomi Fabrics Limited

rating analysis

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Profile
Legal Structure

Roomi Fabrics Limited ("the Company" or "RFL") was incorporated in Pakistan in 2002 as a Public Limited Company.



Background

Roomi Fabrics Limited originated as part of the esteemed Mahmood Group, a diversified enterprise founded in 1935 with its initial operations in the tannery sector. Over the decades, the Group has strategically expanded its footprint across the entire textile value chain—from raw material cultivation to finished goods—while also establishing a strong presence in leather processing, real estate development, and the food industry.


Operations

Roomi Fabrics Limited is primarily engaged in the manufacturing and sale of yarn, greige fabric, and textile made-ups. The company operates a robust production infrastructure comprising 36,000 spindles, 240 weaving looms, 50 terry looms, and 132 specialized stitching machines dedicated to its home textile division. To support uninterrupted operations, Roomi Fabrics has installed a total of 10 generators with a combined power generation capacity of 15 MW. The registered office of the Company is situated in 5-Officers Colony, Multan.


Ownership
Ownership Structure

The Company is chaired by Mr. Khawaja Jalaluddin Roomi, who also serves as its principal shareholder, holding a 16.02% equity stake. Ownership is primarily concentrated within the Roomi family, encompassing Mr. Roomi himself, his spouse, sons, and sisters, thereby maintaining strong family control and governance over the Company.


Stability

A well-defined and streamlined shareholding structure, coupled with a clear succession framework, reinforces the overall strength and continuity of ownership. Formal documentation of the succession plan, however, would further enhance transparency and the overall ownership matrix of the Company.


Business Acumen

Mr. Khawaja Jalaluddin Roomi holds a graduate degree and brings over three decades of diverse professional experience. He has held leadership roles across government, semi-government, and public limited organizations, through which he has developed substantial expertise and strategic insight. His broad exposure and proven leadership equip him with the business acumen necessary to navigate and sustain the Company through future challenges.


Financial Strength

Roomi Fabric operates under the umbrella of the Masood-Roomi Group. The sponsoring family also owns and manages three other textile enterprises—Masood Fabric Limited, Roomi Home, and Masood Apparels—as well as two holding companies, Masood Holding and Roomi Holding. This diversified group presence reflects the sponsors’ financial depth and capacity to extend support to Roomi Fabric when needed.


Governance
Board Structure

The Company’s board comprises five members, including the Chairman, Khawaja Jalaluddin Roomi. The rest of the positions are vested with his two sons, the company's CEO Khawaja Najam-Ud-Din Roomi. and Khawaja Hassam-ud-Din Roomi. Mr. Javed Anjum and Mr. Ghulam Jillani serve as the executive directors. The board lacks independent oversight, and inclusion of independent directors will enhance the governance framework of the Company. 


Members’ Profile

The Board comprises individuals with extensive knowledge and experience in the textile industry. The CEO brings deep expertise across multiple stages of the textile value chain, contributing to a well-rounded and effective leadership team. Additionally, both of his sons hold executive roles within the Company and are actively involved in overseeing strategic initiatives, ensuring continuity and forward-looking governance.


Board Effectiveness

A total of four board meetings were held during the year, with high attendance reflecting strong engagement and commitment to board effectiveness. Nonetheless, there remains an opportunity to enhance governance standards through more comprehensive documentation of meeting minutes and the adoption of best practices.


Financial Transparency

Yousuf Adil, Chartered Accountants, classified in category A by the SBP’s panel of auditors, are the external auditors of the Company. The auditors issued an unqualified opinion on the Company’s financial statements for the year ended 30th June, 2024


Management
Organizational Structure

The Company's organizational structure reflects a structured and well-defined governance and operational framework. At the top, the Chairman and Board of Directors provide strategic oversight. Executive management is led by the CEO, supported by key roles including the Executive Director, CFO, GM Audit, and GM Marketing. Technical functions are split between spinning and weaving, each managed by dedicated Technical Directors, indicating specialization across the production value chain. Financial oversight is further supported by a Manager Accounts under the CFO. The structure promotes functional clarity, accountability, and operational efficiency, aligning well with industry best practices.


Management Team

Top management is backed by a team of skilled professionals across various departments, ensuring efficient reporting and operational continuity. Mr. Khawaja Jalaluddin Roomi, the Chairman, brings over 30 years of experience in the textile industry and has held his current role for more than two decades. The senior management team also reflects strong institutional knowledge, with most members having long-standing tenures within the organization.


Effectiveness

Five management committees, Audit Committee, Risk Management Committee, HR and Remuneration Committee, ESG Committee, and Procurement Committee are in place in to assist the management team. Various reports pertaining to the Company's sales and inventory movements, as well as purchases and procurement activities, are prepared and submitted to senior management as required.


MIS

The Companys' MIS is generated on a monthly and daily basis, for all units. Various reports are collected and submitted to higher management regarding monthly operations, finished goods, cotton reconciliation reports, yield reports, and raw material reports, cashflows, daily production etc.


Control Environment

The Group consistently invests in upgrading its technological infrastructure across both manufacturing and support functions to enhance quality and cost efficiency while staying aligned with emerging technologies. Since 2014, the Company has been utilizing Oracle as its ERP solution and is currently operating on Oracle R12, customized by KPMG Taseer Hadi & Co. Chartered Accountants


Business Risk
Industry Dynamics

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 6MFY25, the textile exports stood at USD 9.1bln. In FY25, the transition from the final tax regime to the normal tax regime is set to impact the profitability matrix of export-oriented units, with a 29% tax on profits and a super tax of up to 10%. The consistent decline in policy rates over the last two quarters, along with the anticipation of further reductions, is expected to provide a cushion in the financial metrics of the industry


Relative Position

Roomi Fabrics Limited operates 36,000 spindles, 240 weaving looms, 50 Terry Looms, and 132 Stitching Machines dedicated to the home textile division. The Company is considered a low to mid-tier player and the relative positoning is considered adequate. 


Revenues

During FY24, the Company reported total net sales of PKR 25,334mln (FY23: PKR 24,942mln), reflecting a marginal year-over-year increase of 1.6%. This growth was primarily driven by export sales, which stood at PKR 21,239mln (FY23: PKR 20,020mln). Key export segments such as home textile and terry products posted sales of PKR 2,496mln (FY23: PKR 1,569mln) and PKR 2,260mln (FY23: PKR 1,479mln), respectively, indicating growing international demand and improved product penetration in global markets. Conversely, local sales experienced a decline to PKR 3,706mln (FY23: PKR 4,522mln), largely due to reductions in yarn sales — PKR 955mln (FY23: PKR 1,524mln) — and cloth — PKR 1,868mln (FY23: PKR 2,196mln). Trading goods also declined modestly to PKR 1,139mln (FY23: PKR 1,455mln).


Margins

During FY24, the gross margin reflected a decline at 16.6% (FY23: 19.0%) followed by a hike in production cost. Consequently, the operating margin also declined to 10.7% (FY23: 13.4%). The net profit of the company saw a sizeable decline to stand at PKR 53mln (FY23: PKR 756mln). Consequently, the net profit margin stood at 0.2% (FY23: 3%). As of Dec ’24, the gross margin and net margin of the company stood at 18.1% and 1.1% respectively, with the profit after tax clocking at PKR 161mln. 


Sustainability

The Company undertook capital expenditures (CAPEX) of PKR 7.0-8.0bln in prior years, resulting in the establishment of a production facility aimed at enhancing terry towel manufacturing capacity. This expansion is anticipated to support topline growth in subsequent periods.


Financial Risk
Working capital

The Company meets its working capital requirements through a mix of internal generation and short-term borrowings (STBs). At end-Jun24, the company's net working capital days declined at 155days (end-Jun 23: 166 days) The inventory days were recorded at 146 days (end-Jun 23: 141 days). The company's short-term leverage stood at -11.2% (end-Jun23: -8%) due to an marginal decrease in trade assets recorded at PKR 14.3bln (end-Jun23: PKR 14.7bln). At end-Dec24, the net working capital days stood at 123days


Coverages

At end-Jun24, the company's free cash flows from operations increased to PKR 3.2bln (end-Jun23: PKR 2.86bln). The company's interest coverage ratio declined to 1.0x (end-Jun23: 1.4x).  At end-Dec24, the company's interest coverage and core operating coverage stood at 1.5x and 1.1x, respectively


Capitalization

At end-Jun24, the company had a highly leveraged capital structure. The company's leveraging remained stagnant to 75.7% (end-Jun23: 75.7%). During FY24, the company's equity base increased to PKR 6.4bln (end-Jun23: PKR 6.2bln). Total borrowings to stand at PKR 21.3bln (end-Jun23: PKR 21.1bln). At end-Dec24, the company's equity base stood at PKR 7bln. The company's leveraging clocked in at 73.9%
 
 

Jun-25

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Roomi Fabrics Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 10,514 10,528 9,503 7,310
2. Investments 967 2,869 2,812 2,595
3. Related Party Exposure 2,240 2,203 1,709 1,362
4. Current Assets 17,647 17,425 17,135 16,083
a. Inventories 9,091 9,826 10,492 8,771
b. Trade Receivables 3,094 2,717 2,510 3,406
5. Total Assets 31,368 33,025 31,159 27,350
6. Current Liabilities 4,251 4,607 3,026 3,109
a. Trade Payables 2,668 2,649 1,372 1,111
7. Borrowings 19,852 21,313 21,107 18,038
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 266 266 240 173
10. Net Assets 6,999 6,838 6,785 6,029
11. Shareholders' Equity 6,999 6,838 6,785 6,029
B. INCOME STATEMENT
1. Sales 14,376 25,334 24,942 23,500
a. Cost of Good Sold (11,772) (21,135) (20,196) (18,812)
2. Gross Profit 2,604 4,199 4,746 4,688
a. Operating Expenses (624) (1,497) (1,299) (1,786)
3. Operating Profit 1,980 2,702 3,447 2,902
a. Non Operating Income or (Expense) 88 1,190 (311) 33
4. Profit or (Loss) before Interest and Tax 2,069 3,892 3,137 2,935
a. Total Finance Cost (1,666) (3,404) (2,124) (1,308)
b. Taxation (242) (436) (257) (481)
6. Net Income Or (Loss) 161 53 756 1,147
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 2,386 3,146 2,858 2,814
b. Net Cash from Operating Activities before Working Capital Changes 483 (101) 1,052 1,604
c. Changes in Working Capital 749 1,195 (2,396) (2,969)
1. Net Cash provided by Operating Activities 1,232 1,093 (1,344) (1,366)
2. Net Cash (Used in) or Available From Investing Activities 259 (760) (1,838) (777)
3. Net Cash (Used in) or Available From Financing Activities (1,557) (396) 3,229 2,196
4. Net Cash generated or (Used) during the period (66) (63) 47 54
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 13.5% 1.6% 6.1% 45.1%
b. Gross Profit Margin 18.1% 16.6% 19.0% 19.9%
c. Net Profit Margin 1.1% 0.2% 3.0% 4.9%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 21.8% 17.1% 1.9% -0.7%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 4.6% 0.8% 11.8% 21.5%
2. Working Capital Management
a. Gross Working Capital (Average Days) 157 184 184 183
b. Net Working Capital (Average Days) 123 155 166 166
c. Current Ratio (Current Assets / Current Liabilities) 4.2 3.8 5.7 5.2
3. Coverages
a. EBITDA / Finance Cost 1.7 1.1 1.5 2.4
b. FCFO / Finance Cost+CMLTB+Excess STB 1.1 0.7 1.0 1.4
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 4.6 -74.7 8.0 2.8
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 73.9% 75.7% 75.7% 74.9%
b. Interest or Markup Payable (Days) 69.3 94.3 123.0 107.9
c. Entity Average Borrowing Rate 15.2% 15.3% 10.9% 7.8%

Jun-25

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Roomi Fabrics Limited

rating scale

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Jun-25

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Roomi Fabrics Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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