Nisar Spinning Mills (Pvt.) Limited

CREDIT RATING REPORT | Jul-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
11-Jul-25 A- A2 Stable Maintain -
12-Jul-24 A- A2 Stable Maintain -
14-Jul-23 A- A2 Stable Initial -
About the Entity

NSMPL was incorporated on June 14, 2005, under the Companies Ordinance, 1984 as a (Pvt) Ltd Company. Nisar Spinning Mills (Pvt.) Limited is exclusively owned by the sponsoring family (~100%) where, the ownership of the Company resides with Mr. Anjum Nisar (~81.89%) and Mr. Tariq Nisar (~18.10%). The board consists of two members: Mr. Anjum Nisar (CEO & Group chairman) and Mr. Tariq Nisar-Executive Director. The company operates two spinning units with an installed capacity of 52,800 spindles and also engages in the production of non-woven fabric, with two plants.

Rating Rationale

The rating of Nisar Spinning Mills (Pvt.) Limited (“the Company” or “NSMPL”) is underpinned by the Nisar family's prominent business profile, with an established presence across diverse sectors of the economy, including chemicals, plastics, metals, spinning, and synthetic leather. The Company produces a variety of yarns, with Siro yarn being their prime selling product, followed by PVC yarn and CVC yarn. The Company's revenue is primarily driven by local sales, with exports accounting for ~20.3% of the total revenue base. During 9MFY25, NSMPL's topline declined to PKR 10.35bln (FY24: PKR 14.96bln; 9MFY24: PKR 11.65bln), primarily due to a slump in domestic yarn demand. 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. Additionally, a rise in energy tariffs over the years further strained margins, resulting in a reduction of gross margins to 3.2% in 9MFY25 (9MFY24: 7.3%, FY24: 3.4%). The Company recorded a net loss of PKR 337 mln during 9MFY25. However, the recent reduction in the policy rate, along with the phased installation of a 8.5MW solar power plant under the Company’s renewable energy initiatives, is expected to provide a cushion to the cost structure in the coming quarters. The recent budgetary measure introducing 18.0% GST on imported yarn is anticipated to support the domestic spinning industry by restoring competitiveness, promoting local procurement, and reducing the distortion caused by previously untaxed imports under the EFS regime The Company’s medium-term strategy focuses on expanding its footprint in the weaving and knitting segments, aimed at strengthening its business sustainability profile and enhancing value chain integration. The financial risk profile of the Company is considered adequate, with a stretched working capital cycle that depicts the industry norm. The sponsor’s loan of PKR 2.2bln provides additional liquidity support to the Company’s funding structure, primarily to meet working capital needs, in conjunction with conventional short-term bank borrowings. The Company maintains a highly leveraged capital structure with adequate coverages and cash flows. NSML carries an advance from a buyer which according to management, is expected to be gradually adjusted against yarn deliveries as per the agreed contractual terms. The textile industry is grappling with several key challenges, including evolving global demand and consumption trends, alongside mounting pressures on price competitiveness. These pressures stem from a revision in the minimum wage, elevated energy tariffs, which despite a reduction, remain high in regional comparison, reliance on imported cotton due to an 18% GST on local procurement, and the looming imposition of a 29.0% reciprocal tariff on exports to the United States, currently deferred for 90 days

Key Rating Drivers

The ratings are dependent on management’s ability to sustain its growth in revenues, margins and profitability. Prudent management of the working capital, and maintaining sufficient cash flows and coverages are imperative. The alignment of the Company's performance with its financial projections remains vital for the ratings.

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

Nisar Spinning Mills (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Nisar Spinning Mills (Private) Limited (the Company or “NSMPL”) was incorporated on June 14, 2005 under the Companies Ordinance, 1984 (now the Companies Act, 2017) as a private company limited by shares.


Background

The Company was formerly a part of the ATS Group, which was established in 1968 by the late Mian Nisar Elahi. With an industrial legacy spanning over five decades, the Group has built a strong reputation and established a significant presence in both domestic and international markets.


Operations

Nisar Spinning Mills (Private) Limited (NSMPL) has been a well-known name in the field of textiles since 2006. The state-of-the-art textile spinning unit is located at 3-KM, Raiwind Sundar Road, Lahore. The company operates two spinning units with an installed capacity of 52,800 spindles, successfully meeting the local and global demand of its valued customers. NSMPL is globally recognized for producing a vast range of high-quality, contamination-free yarn. The company also engages in the production of non-woven fabric, with two plants having an installed capacity of 15 MT/day.


Ownership
Ownership Structure

Nisar Spinning Mills (Pvt.) Limited is exclusively owned by the sponsoring family (~100%) where, the ownership of the Company resides with Mr. Anjum Nisar (~81.89%) and Mr. Tariq Nisar (~18.10%)


Stability

Over the years, the Company's ownership structure has remained stable, with full control retained by the sponsoring family. A formal shareholder agreement, including a defined exit mechanism, reinforces succession planning and contributes to the overall stability of the ownership framework.


Business Acumen

The Nisar Family’s longstanding presence of over fifty years in the industry reflects a deep-rooted understanding of the business landscape. Their extensive experience and active involvement in steering key decisions highlight their strong business acumen and capacity to lead the Company effectively.


Financial Strength

With solid financial foundations and access to diverse markets, Nimir Chemicals Pakistan Limited and ATS Synthetics (Private) Limited—key businesses under the Nisar family—demonstrate the Sponsors’ strong capacity to extend support should the need arise.


Governance
Board Structure

The board is dominated by the sponsors of the Company. The board consists of two members which include CEO Mr. Anjum Nisar (Group chairman) and Mr. Tariq Nisar-Executive Director. The board lacks independent oversight and the inclusion will enhance the overall governance profile of the Company. 


Members’ Profile

Mr. Mian Anjum Nisar, the Company's Chairman, is a Former President of The Lahore Chamber of Commerce and Industry (LCCI), and FPCCI The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) with more than 47 years of diversified Experience in different industrial sectors specially (Artificial leather & Petrochemical Industries). Mr. Tariq Nisar holds over four decades of chemical sector experience in Pakistan. Mr. Mian Tariq Nisar, Company's director actively and substantially contributes towards the stability of Pakistan in the areas of textile spinning, chemicals, and petrochemical business chemical segments. 


Board Effectiveness

The Board of NSML functions primarily in an advisory capacity, with operational authority delegated to professional management. Day-to-day operations are executed by the respective departmental heads under this delegated structure.


Financial Transparency

ShineWing Hameed Chaudhri & Co chartered accountants, the ‘SBP-B category’ accounting firm, is the external auditor of the Company. The auditors expressed an unqualified audit opinion on the financial statements for the year ended June, 2024.


Management
Organizational Structure

The Company has a lean organizational structure. The company’s structure is mainly divided into four divisions. The four divisions are 1) Finance, 2) Sales & Marketing Services, 3) Production and 4) Administration. All divisions are mainly headed by CEO and Executive Director.


Management Team

Mr. Mian Anjum Nisar, the Company's CEO holds a career spanning over 47 years, he has held prestigious positions, including President of both the Lahore Chamber of Commerce and Industry (LCCI) and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). His expertise covers a wide range of industrial sectors, with a strong focus on artificial leather and petrochemicals. 


Effectiveness

The current management committee within the Company is functioning adequately in terms of duties, delegation of authority, and decision-making. However, there is room for a slight improvement to accomplish the company's underlying goals and objectives.


MIS

Nisar Spinning Mills (Pvt.) Limited has implemented the latest version of SAP Business One 9.3 PL: 11. Currently, they are in contractual agreement with Abacus Consulting (Pvt.) Limited for maintenance and any upgradation of SAP software.


Control Environment

The Company has an in-house internal audit department which comes under the supervision of the Board. For the purpose of quality assurance, the Company has installed VI spectrographs, Tensojet 4, Uster Tester 5 and Quantum yarn clearer, from uster Technologies of Switzerland.


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 9MFY25, the textile exports stood at USD 13.6bln. 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.


Relative Position

The Company’s relative position is adequate compared to Pakistan's overall Spinning industry size.


Revenues

During 9MFY25, the Company reported revenue of PKR 10,354mln (9MFY24: PKR 11,648mln, FY24: PKR 14,966mln), reflecting a year-over-year decline of 11.1%. The dip is attributable to the challenge of imported raw material availability and expensive raw material caused the price competitiveness challenge in the international market along with global demand. Export revenues contributed PKR 2,106mln, with China and Hong Kong being the primary export markets.


Margins

During FY24, the gross margin of the company declined to stand at 3.4% (FY23: 10.9%), driven by the significant hike in the energy cost. This translated into dip in operating margin of 1.9% (FY23: 9.3%). The net margin experienced decline as well to -0.6% (FY23: 7.8%), as the Company has recorded a net loss of PKR 688mln (FY23: PKR 138mln profit). During 9MFY25, the Company's gross margin and net margin clocked at 3.2% and -3.3% respectively with the ner loss clocking at PKR 337mln.


Sustainability

Going forward,  the Company intends to enhance and diversify its operations through vertical integration across both upstream and downstream segments of the production value chain. In addition, the Company has increased its installed solar energy capacity as a strategic response to the escalating risk of rising energy costs. This initiative is expected to strengthen the Company’s cost structure and improve long-term resilience. NSML carries an advance from a buyer, which according to management, is expected to be gradually adjusted against yarn deliveries as per the agreed contractual terms.


Financial Risk
Working capital

The Company’s working capital requirements, driven by its inventory and receivables, are managed through a blend of internal generation and short-term borrowings (STBs). During 9MFY25, net working capital days sizably increased to 168 days (FY24: 151 days), primarily due to an inclined inventory days (9MFY25: 168days, FY24: 151days). 


Coverages

During FY24, the Company’s FCFO clocked at PKR 399mln (FY23: 1,059mln, 9MFY25: PKR 243mln) driven by the sizable decline in profitability. The Company’s interest coverage and debt coverage stood at 0.7x and 0.6x respectively (FY23: 1.5x and 1.3x, respectively) driven by the decline in the FCFO.


Capitalization

As at end-Mar'25, the capital structure of the Company is leveraged the debt-to-capital ratio is 74.8% (FY24: 56.7%, FY23: 53.4%).  The surge in leveraging is attributable to the addition of subordinate borrowing from the directors. The Company’s borrowing book during FY24 stood at PKR 2,404mln (FY23: PKR 2,890mln, 9MFY25: PKR 2,261mln), dominated by the short-term borrowing (FY24: PKR 1,410mln, FY23: PKR 2,890mln, 9MFY25: PKR 1,351mln). The Company’s equity base clocked at PKR 1,836mln (FY23: PKR 2,525mln, 9MFY25: PKR 1,499mln).
 
 

Jul-25

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Nisar Spinning Mills (Pvt.) Limited

financial summary

(PKR mln)

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Mar-25
9M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 3,636 3,524 3,296 3,274
2. Investments 0 0 0 0
3. Related Party Exposure 0 0 0 0
4. Current Assets 9,234 7,640 8,295 5,455
a. Inventories 4,729 3,582 3,726 3,100
b. Trade Receivables 2,252 2,271 3,027 1,328
5. Total Assets 12,870 11,164 11,592 8,729
6. Current Liabilities 514 533 698 570
a. Trade Payables 62 63 197 144
7. Borrowings 2,261 2,404 2,890 5,462
8. Related Party Exposure 8,181 5,949 5,017 0
9. Non-Current Liabilities 415 442 461 310
10. Net Assets 1,499 1,836 2,525 2,387
11. Shareholders' Equity 1,499 1,836 2,525 2,387
B. INCOME STATEMENT
1. Sales 10,354 14,966 9,804 10,075
a. Cost of Good Sold (10,023) (14,464) (8,732) (8,174)
2. Gross Profit 331 502 1,072 1,902
a. Operating Expenses (159) (213) (161) (183)
3. Operating Profit 172 289 911 1,719
a. Non Operating Income or (Expense) 5 4 (16) (62)
4. Profit or (Loss) before Interest and Tax 177 293 895 1,657
a. Total Finance Cost (443) (792) (787) (462)
b. Taxation (71) (190) 31 (381)
6. Net Income Or (Loss) (337) (688) 139 814
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 243 399 1,059 1,683
b. Net Cash from Operating Activities before Working Capital Changes (154) (383) 323 1,262
c. Changes in Working Capital (1,708) 1,586 2,300 (1,191)
1. Net Cash provided by Operating Activities (1,862) 1,203 2,623 71
2. Net Cash (Used in) or Available From Investing Activities (615) (557) (360) (636)
3. Net Cash (Used in) or Available From Financing Activities 2,028 (484) (2,275) 592
4. Net Cash generated or (Used) during the period (449) 163 (13) 27
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -7.8% 52.6% -2.7% 26.2%
b. Gross Profit Margin 3.2% 3.4% 10.9% 18.9%
c. Net Profit Margin -3.3% -4.6% 1.4% 8.1%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -14.1% 13.3% 34.3% 4.9%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] -27.0% -31.6% 5.6% 41.1%
2. Working Capital Management
a. Gross Working Capital (Average Days) 170 154 208 143
b. Net Working Capital (Average Days) 168 151 202 140
c. Current Ratio (Current Assets / Current Liabilities) 18.0 14.3 11.9 9.6
3. Coverages
a. EBITDA / Finance Cost 1.0 0.7 1.5 4.2
b. FCFO / Finance Cost+CMLTB+Excess STB 0.4 0.4 1.2 3.0
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) -11.9 -2.6 3.6 1.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 74.8% 56.7% 53.4% 69.6%
b. Interest or Markup Payable (Days) 83.0 40.5 51.3 54.5
c. Entity Average Borrowing Rate 18.0% 28.8% 18.2% 9.0%

Jul-25

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Nisar Spinning Mills (Pvt.) Limited

rating scale

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Jul-25

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Nisar Spinning Mills (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.
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Jul-25

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