Kassim (Pvt). Limited ("KPL" or "the Company") operates as a private Company, under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017).

The Company was incorporated in Pakistan on 25 July 2014 under the sponsorship of the Machiyara Group. The establishment of the Company formed part of the Group’s broader strategic initiative to expand its footprint within the textile sector through diversification into value-added textile products. KPL was primarily established to strengthen the Group’s presence across the textile value chain by extending operations beyond conventional spinning and fabric manufacturing into the production of finished garments and other value-added offerings.

The principal activity of KPL is the manufacturing and sale of garments and other value-added textile products. The Company’s product portfolio primarily comprises denim jeans, denim shorts, denim jackets, denim bottoms, and other finished apparel products catering to export markets. The registered office of the Company is located at Plot No. 62, 25-KM National Highway, Landhi, Karachi.

Kassim (Pvt.) Limited operates as a business venture of the Machiyara Group and functions as a wholly owned subsidiary of Kassim Textiles (Pvt.) Limited.

The ownership structure of the sponsoring group primarily rests with the two sponsoring brothers and their respective families. Although a formal succession framework has not been established, the family understanding and alignment between the sponsors provide comfort with respect to the continuity and stability of the business. The ownership structure of the Company is expected to remain stable in the foreseeable future.

The sponsoring group maintains a long-established presence and diversified experience across multiple sectors of the country’s economy. Supported by the sponsors’ strategic direction and industry expertise, the Company has demonstrated resilience through varying economic cycles while sustaining operational continuity and gradual business growth.

The financial strength of the Company emerges from the foothold of the sponsoring family within the textile sector through another operating Company; Kassim Textiles (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.

The Board remains predominantly controlled by four members of the sponsoring family, with no independent oversight in place. The Board is chaired by Mr. Muhammad Shabbir. The appointment of an independent director would strengthen the Company’s governance framework.

Mr. Amanullah Kassim is a seasoned businessman with more than three decades of extensive experience across the construction, real estate, textile, and trading sectors. All Board members also possess considerable knowledge and industry experience, particularly in the textile sector.

The Company has not established any formal Board committees; however, Board of Directors (BoD) meetings are conducted regularly to review the Company’s financial performance and its progress against strategic and business targets. Key matters deliberated during these meetings are formally documented.

To align with high standards of transparency, Nasir Javaid Maqsood Imran (NJMI) Chartered Accountants have been appointed as the external auditors of the Company. They are rated in "Category B" by the State Bank of Pakistan's panel of auditors. The auditors expressed a qualified opinion on the financial statements of the Company for the period ended June 30th, 2025, as the Company has not carried out actuarial valuation of staff gratuity (staff retirement benefit) for determination of liability in accordance with Projected Unit Credit Method, prescribed in IAS 19 - Employee Benefits" along with required disclosures. The Company has an in-house internal audit department that reports directly to the CEO and Board of Directors.

The Company maintains a well-defined organizational structure to ensure the smooth execution of operations. Core functions are segregated into various departments, including: (i) Finance & Commercial (F&C), (ii) Marketing, (iii) Human Resource (iv) Technical, (v) Production, and (vi) Information Technology. In addition, the GM (F&C) also oversees the Human Resources, Administration, and Procurement functions. All departmental heads report directly to the Directors.

Mr. Amanullah Kassim, the Chief Executive Officer, has been associated with the sponsoring group for more than three decades and possesses extensive knowledge of the textile sector, which supports effective strategic and operational decision-making. He is assisted by a team of seasoned and highly qualified professionals with relevant industry expertise. The Chief Financial Officer, Mr. Waqas Farooq, ACA, also brings with him 15 years of professional experience.

The Company has S&OP platform in place under a management committee, managed by operational heads of the departments and under the directorship of Mr. Arsal Shabbir s/o Mr. M. Shabbir (Director Operations).

The SAP system was implemented in 2024 by Abacus Consulting Technology Pvt. Limited, enabling comprehensive MIS reporting, process automation, and real-time data monitoring across accounting and operational functions. The system has enhanced the accuracy, transparency, and efficiency of financial and operational reporting by integrating key business processes onto a centralized platform. This facilitates streamlined workflows, improved internal controls, and stronger compliance readiness, while supporting the effective decision-making.

Production operations are entirely order-driven, ensuring alignment with customer requirements and demand. A stringent quality control process is in place, with the Quality Control (QC) department conducting thorough inspections of finished products to maintain consistent standards. The Company is also ISO 9001 certified, reflecting its adherence to internationally recognized quality management systems.

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.

Kassim (Pvt). Limited falls in the small tier of the respective industry.

The Company’s topline recorded significant growth between June 2023 and June 2025, reaching PKR 11.7 billion (FY24: PKR 10.0 billion). This reflects a year-on-year increase of 17.3%, primarily driven by a strategic shift towards a one-window solution concept for international customers, which enhanced business volumes and improved operational efficiency. The revenue base remains entirely export-oriented. Geographically, the Company maintains a well-diversified export footprint, with key destinations including Spain, France, the Netherlands, Italy, Germany, and other international markets. Denim bottoms continue to be the top-selling product, contributing the highest share in both pricing and volumes. Customer concentration at the top ten level remains moderate, comprising well-established and stable international clients, which provides a level of comfort in revenue stability. In 1HFY26, the Company reported topline of PKR 4.3 billion.

During FY25, the Company’s gross profit margin improved significantly to 14.9% (FY24: 11.7%), primarily supported by the strategic shift in business operations. The Company’s operations also benefited from captive power generation boiler and solar projects of the parent Company reducing its energy cost. Despite an increase in operating expenses amid persistent inflationary conditions, the PBIT margin improved to 5.93% (FY24: 4.9%), reflecting improved operational efficiency. However, the bottom line declined to PKR 103 million (FY24: PKR 128 million), translating into a net profit margin of 0.9% (FY24: 1.3%), despite a reduction in finance costs. In 1HFY26, the Company reported a gross profit margin of 12.4% and a net profit margin of 1.5%.

The management intends to expand its product portfolio by scaling operations into denim kidswear and ladieswear garments. In this regard, the Company is actively in the process of onboarding new high-potential customers to support future growth and diversification. From a sustainability perspective, the holding company operates a 9-megawatt solar power facility along with a captive power boiler, contributing to improved energy efficiency and reduced reliance on conventional energy sources.

The Company’s working capital cycle is primarily driven by inventory and trade receivable days, and is financed through a mix of internally generated cash flows and short-term borrowings. In 1HFY26, the net working capital cycle remained stretched due to higher inventory levels, reflecting a seasonal peak in stock accumulation. The trade receivable cycle also lengthened, indicating an increase in the customer collection period. Despite these pressures, the Company maintains a strong liquidity position, as evidenced by the current ratio of 7.6x (FY25: 7.1x).

In 1HFY26, the slight decrease in profit before tax contributed to Free Cash Flows from Operations (FCFO) recorded at PKR 221 million (FY25: PKR 482 million). With moderation in borrowing costs and FCFO, the Company’s interest coverage ratio and core operating coverage ratios remained within a comfortable range. The maintenance of these coverage ratios is considered critical for the assigned credit ratings.

The Company’s debt structure comprises a mix of SBP-related financing and short-term borrowings, including facilities under the State Bank of Pakistan’s Export Finance Scheme (EFS) and Islamic Borrowings. The Company has a low-leveraged capital structure. The total leveraging stood at 22.1% in 1HFY26 (FY25: 19.4%), primarily utilized to support working capital requirements. Meanwhile, the equity base stood at PKR 8.1 billion (FY25: PKR 8.4 billion), with unappropriated profits increasing to PKR 235 million (FY25: PKR 171 million).