Kassim Textiles (Pvt.) Limited

RATING REPORT | Dec-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
30-Dec-25 A- A2 Stable Maintain -
30-Dec-24 A- A2 Stable Maintain -
30-Dec-23 A- A2 Stable Maintain -
31-Dec-22 A- A2 Stable Maintain -
31-Dec-21 A- A2 Stable Maintain -
About the Entity

Kassim Textiles (Pvt). Limited was incorporated on August 27, 1991, as a private limited Company. As the flagship entity of the Machiyara Group, it operates a modern weaving unit that manufactures denim fabric for both the local and international garment industries. The entire shareholding of the Company is held by the Kassim family through individual shareholdings. The major stake is held by Mr. Muhammad Shabbir (48.81%) and Mr. Amanullah Kassim (49.99%). The remaining shares are owned by Mr. Arsal Shabbir Khanani (1.18%), Ms. Nasreen Shabbir (0.01%), and Ms. Seema Amanullah (0.01%). The Company has a sponsor-dominated board comprising four members. The position of Chairman and CEO is vested with Mr. Muhammad Shabbir. He possesses textile expertise and has a future-oriented perspective for the Company. He has been associated with the Company for over three decades. He is assisted by a team of highly qualified and seasoned professionals.

Rating Rationale

The assigned ratings of Kassim Textiles (Pvt.) Limited (“the Company” or “KTL”) derive their rationale from the Company’s position within the competitive textile landscape. The Company operates a fully integrated textile setup encompassing ginning, spinning, and weaving, with a production capacity of 30,624 spindles, 3,304 rotors, and 364 looms. KTL maintains a diversified product portfolio comprising a wide range of fabrics and yarns with counts ranging from 6s to 16s, including specialized dyed yarn. Over the years, the Company has established a stable and diversified customer base, thereby supporting revenue growth and business sustainability.

The Company continues to achieve a significant growth in its topline (FY24: PKR 31.2bln; FY23: PKR 22.2bln), driven by notable volume expansion to meet the rising demand in the international market. In terms of revenue contribution, the fabric segment remains the largest contributor, outperforming other business lines, followed by the spinning segment. Indirect exports continue to be entirely generated through fabric sales. The Company’s margins are gradually improving due to the optimization of the overall cost structure. This is supported by several investments in cost-efficient energy alternatives. Non-core income generated from the deployment of surplus funds further strengthens the profitability matrix. However, these benefits are partially offset by elevated finance costs and the transition of the taxation regime from the Final Tax Regime (FTR) to the Normal Tax Regime (NTR) for export-oriented units. Despite these pressures, the Company’s bottom line reflects an improvement (FY24: PKR 700mln; FY23: PKR 391mln).

The Company finances its working capital requirements through internal cash generation and short-term borrowings. The financial risk profile is considered adequate, characterized by a leveraged capital structure and stretched working capital management. However, the coverage metrics have shown modest recovery, supported by improved cash flows.

Key Rating Drivers

The ratings are dependent on the Company's ability to sustain its business profile by maintaining profitability and margins, while expanding business volumes. Any deterioration in the financial risk profile will have a negative impact on the assigned ratings.

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

Kassim Textiles (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Kassim Textiles (Pvt). Limited ('the Company' or 'KTL') was incorporated on August 27, 1991 as a private limited Company.


Background

The Company is a prominent business venture of Machiyara Group. Apart from Kassim Textiles, the Group has presence in the textile, construction, real estate development, mobile phones and trading etc.


Operations

KTL is a modern weaving unit specializing in the manufacture of denim fabric for both local and branded garment industries. The Company’s operational infrastructure includes 30,624 spindles, 3,304 rotors, and 364 looms. KTL produces a wide range of yarns, from 6 counts to 16 counts, catering to diverse customer needs. Its registered office is located on National Highway, Landhi, Karachi. To enhance operational efficiency, the Company has transitioned to road shipments for exports. This shift has reduced lead times by nearly 50% compared to seaport shipments, ensuring faster delivery and improved service for clients.


Ownership
Ownership Structure

The entire shareholding of the Company is held by the Kassim family through individual shareholdings. The major stake is held by Mr. Muhammad Shabbir (48.81%) and Mr. Amanullah Kassim (49.99%). The remaining shares are owned by Mr. Arsal Shabbir Khanani (1.18%), Ms. Nasreen Shabbir (0.01%), and Ms. Seema Amanullah (0.01%).


Stability

The Company’s major shareholding is concentrated among three individuals, who established the business in 1991. Over the years, the ownership structure has remained stable, reflecting continuity and stability in management and strategic direction. The same ownership structure is expected to persist in the foreseeable future.


Business Acumen

The Company was established by the Machiyara Group, with a strong presence and expertise across multiple sectors of the country’s economy. Leveraging the sponsor’s strategic vision and experience, the Company has successfully navigated various economic cycles, enabling the expansion of its operations while maintaining consistent growth.


Financial Strength

The financial strength of the Company emerges from the foothold of the sponsoring family within the textile sector through two operating companies: Kassim (Pvt). Limited, a subsidiary of Kassim (Pvt). Limited and Fashion Knit Industries (Pvt.) Limited. Machiyara group owns various business entities, including construction, real estate development, mobile phones, and trading, etc. This diversified business presence indicates the sponsors’ capacity to support the Company, if needed.


Governance
Board Structure

Overall control of the Board is held by four members of the sponsoring family. The position of Chairman & CEO is held by Mr. Muhammad Shabbir. The inclusion of an independent director on the Board will strengthen the governance framework of the Company.


Members’ Profile

The members of the board have three decades of knowledge and extensive experience in the textile industry. Currently, there are no independent directors on the board.


Board Effectiveness

BoD meetings are held regularly in which discussion on various aspect are recorded in minutes and decision or action is referred to Chairman/CEO, Mr Muhammad Shabbir.


Financial Transparency

Nasir Javaid Maqsood Imran (NJMI) Chartered Accountants, have been appointed as the external auditors of the Company rated in category B by the SBP panel of auditors. They expressed an unqualified opinion on the financial statements of the Company for fiscal year 2024. The audit for FY25 is nearing completion.


Management
Organizational Structure

The organizational structure of the Company is divided into various functional departments, namely: (i) Finance & Commercial (F&C), (ii) Marketing, (iii) Technical, (iv) Production, (v) Information Technology, and (vi) GM (F&C) is also looking after HR, Admin and procurement functions. All departments directly reports to the directors of the Company.


Management Team

Mr Muhammad Shabbir is the CEO of the Company. He carries twenty-nine years of professional experience and holds Master's in Chemical Engineering. He has been working with this group since the beginning. Mr. Saleem Jangda, CFO of the Company, has been associated since year 2000.


Effectiveness

The management meetings are held on a periodic basis with follow-up points to resolve or proactively address operational issues, if any, eventually ensuring the smooth flow of operations. These meetings are headed by the Company's CEO.


MIS

The Company has transitioned from an in-house ERP system to SAP S/4HANA, a globally recognized enterprise resource planning platform. The implementation of SAP S/4HANA has significantly enhanced the Company’s financial reporting, internal controls, data accuracy, and real-time monitoring of operations. The system provides improved transparency, stronger compliance, better inventory and supply chain management, alongside robust integration across finance, procurement, sales, and production functions.


Control Environment

Production is completely order-driven, and there is a rigorous quality check on the end product by the QC department. The Company has obtained ISO 9001 certification. The Company has an in-house internal audit department that reports directly to the CEO and board of directors.


Business Risk
Industry Dynamics

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% in FY25 (FY24: up about 5.8% YoY), 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 (compared to 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. Considering the current climate change, flooding in major cotton regions, and shifting crop patterns, the target of approximately 10.2mln bales for FY26 appears challenging.


Relative Position

With an overall production capacity of 30,624 spindles, 3,304 rotors, 364 looms and 6 sawjin machines, the Company falls in the mid-tier of the respective universe.


Revenues

The Company’s topline is predominantly driven by exports, followed by a notable contribution from domestic sales. The Company’s topline witnessed an upswing, recording a three-year CAGR of 27.2% from FY22 to FY24. The growth trajectory has continued (FY24: PKR 31.2bln; FY23: PKR 22.2bln), primarily attributable to an overall increase in business volumes across all operating segments. The sales mix continues to tilt toward international market to capitalize on rising demand for denim fabric. The Company’s export destinations include Turkey, Bangladesh, Cambodia, Greece, and others, indicating a low geographic concentration risk.


Margins

The Company’s gross profit margin continues to improve (FY24: 12.5%; FY23: 10.7%) on the back of controlled production costs. Management remains cognizant of energy cost risks and has undertaken strategic investments in renewable energy alternatives, thereby enhancing core profitability. Income from investments in term deposit receipts (TDRs) provides a cushion to the bottom line. However, the elevated finance costs and the taxation burden continue to weigh on the bottom line. Despite these pressures, the Company’s net profitability reflects a sizeable increase (FY24: PKR 700mln; FY23: PKR 391mln), supported by an improving net profit margin (FY24: 2.2%; FY23: 1.8%).


Sustainability

Going forward, with improved efficiency and a more specialized product profile, management expects margins to improve further. The Company supplies to several downstream export-oriented units in Pakistan, which are anticipating a strong rebound in global demand. Over the years, the Company has undertaken various energy-efficient initiatives to strengthen its profitability matrix. Additionally, the Company owns a wholly owned subsidiary, Kassim (Private) Limited, which was established to enhance business diversification by moving down the textile value chain into garment manufacturing, specifically jeans production.


Financial Risk
Working capital

The Company meets its working capital requirements through a combination of internal cash generation and short-term borrowings (STBs). Owing to management’s ongoing efficiency initiatives, the Company’s net working capital cycle improves (FY24: 103 days; FY23: 114 days), primarily driven by a reduction in the inventory holding period. The Company’s borrowing capacity remains limited, as reflected by lower short-term trade leverage. The Company maintains an adequate liquidity profile, with the current ratio remaining within a comfortable range.


Coverages

The free cash flows from operations reflect an increase (FY24: PKR 3.5bln; FY23: PKR 2.7bln), indicating healthy growth in operational performance. Despite the improvement in FCFO, the Company’s interest coverage and core operating coverage remain at moderate levels. However, the debt payback period shows a reduction (FY24: 1.6 years; FY23: 2.5 years).


Capitalization

The Company operates with a moderately leveraged capital structure. Its debt portfolio comprises a combination of SBP-subsidized financing and conventional borrowings. Owing to elevated working capital requirements, short-term borrowings continue to constitute the majority of total debt (FY24: PKR 7.2bln; FY23: PKR 6.3bln). Meanwhile, the Company’s equity base continues to strengthen (PKR 9.2bln; FY23: PKR 8.5bln).
 
 

Dec-25

www.pacra.com

Kassim Textiles (Pvt.) Limited

rating scale

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Dec-25

www.pacra.com

Kassim Textiles (Pvt.) 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.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
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  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Dec-25

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