Fazal Holdings (Pvt.) Limited

CREDIT RATING REPORT | Nov-25

Logo
Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
07-Nov-25 A+ A1 Stable Maintain -
08-Nov-24 A+ A1 Stable Maintain -
08-Nov-23 A+ A1 Stable Maintain -
10-Nov-22 A+ A1 Stable Upgrade -
22-Nov-21 A A1 Stable Maintain -
About the Entity

Fazal Holdings (Pvt) Ltd is Private Limited Company acting as a holding company associated with Fazal Group. Fazal Group was incorporated in 1966 and is a renowned textile Group in Pakistan. Fazal Cloth Mills Ltd. – the flagship Company of the Group, was also incorporated in 1966. Fazal Holdings is owned by the members of the sponsoring family i.e., Fazal family. Majority of shares reside with Mr. Rehman Naseem (~47.25%). Mr. Aamir Naseem Sheikh’s family owns a stake of ~47.25%; through his sons, Mr. Yousaf Aamir and Mr. Abdullah Aamir, owning ~22% each, in the Company. While remaining shareholding resides with Mr. Sheikh Naseem (~2.5%) and Mrs. Nighat Naseem (~3%).

Rating Rationale

The ratings incorporate the established position of Fazal Holdings (Private) Limited (“Fazal Holdings” or “the Company”) as a diversified investment holding entity Associated with the Fazal Group, one of the leading textile conglomerates of South Punjab. The Company maintains a robust investment portfolio comprising both strategic holdings (~73%) and a trading portfolio (~27%) diversified across key sectors of the economy.
Fazal Holdings’ strategic investments are Primarily Concentrated in Fazal Cloth Mills Limited (“FCML”) a renowned name in the spinning sector of Pakistan. It operates with a vision to establish vertical integration by offering a broad range of premium quality products at competitive prices, both in the local and international markets. It specializes in producing greige fabric and a variety of yarns, including multi-count/multi-twist, double, zero-twist, organic, Supima, Lycra, Giza, and USA cotton yarns.
The Company’s short-term trading portfolio, valued at PKR 14.55bln, is well diversified across key sectors including banking, fertilizers, energy, and fast-moving consumer goods. The portfolio primarily comprises blue-chip equities and mutual funds, ensuring a balanced mix of growth and income-generating assets. Exposure to the fertilizer and energy sectors continues to provide stable returns, while selective investments in defensive and consumer-driven stocks add resilience. Overall, the portfolio remains highly liquid, actively managed, and strategically aligned with prevailing market conditions.
On a standalone basis, Fazal Holdings posted a profit after tax of PKR 12.06bln for FY25 (FY24: PKR 3.72bln), reflecting a substantial increase of ~224% YoY. The remarkable improvement is primarily attributed to a revaluation gain of PKR 5.8bln on investment property, coupled with significant capital gains and dividend income from its trading book. The Company’s short-term investment portfolio expanded by ~70%, aligning with positive market momentum and prudent reallocation toward high-quality, liquid blue-chip securities. The Company’s balance sheet strength is reinforced by a strong equity base of PKR 24.9bln with a low leveraged capital structure. Short-term borrowings stood at PKR 1.95bln, while long-term borrowings amounted to PKR 2.7bln, primarily obtained to fund new investments and enhance liquidity. Consequently, the interest coverage ratio improved notably, supported by sizable free cash flows and strong dividend income. The Company’s investment decisions are led by Mr. Rehman Naseem, supported by dedicated research and analysis resources within the Fazal Group and external brokerage houses. The sponsor profile remains strong, reflecting the Fazal Group’s longstanding track record and diversified business presence in the textile, energy and Fertilizer. Continued sponsor support serves as a key rating factor.

Key Rating Drivers

The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion amidst the prevailing tough environment. Timely materialization of these initiatives into sustainable ventures is critical. Strong performance of subsidiaries, stable dividends, and effective management of financial profile and liquidity remains important.

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

Fazal Holdings (Pvt.) Limited

rating analysis

Logo
Profile
Background

Fazal Holdings (Pvt) Ltd, established in April 1995 as Amir Fine Export (Pvt.) Limited, initially focused on trading yarn, cloth, and securities. Rebranded in 2016, it now serves as the holding Company for Fazal Group, managing strategic investments in affiliated companies and maintaining a trading portfolio of short-term investments in both quoted and unquoted securities.


Structural Analysis

The Company's investment portfolio comprises Strategic Investments (~73%) and Trading Portfolio (~27%). The Company has strategically invested in Fazal Group’s flagship Company 'Fazal Cloth Mill Limited' (FCML), which aims to establish a vertically integrated textile business that produces value-added products with a mid-tier production capacity amongst other players. Fazal Holdings has designed a conservative investment policy in accordance with its equity, primarily investing the majority of its trading portfolio in blue chip shares diversified across leading sectors.


Ownership
Ownership Structure

Fazal Holdings is predominantly owned by the Fazal family, the founding sponsors of the Company. The largest share of ~47.25% is held by Mr. Rehman Naseem. The family of Mr. Aamir Naseem Sheikh also possesses a significant stake of ~47.25%, divided between his sons, Mr. Yousaf Aamir and Mr. Abdullah Aamir, ~22% each respectively. The remaining shares are held by Mr. Sheikh Naseem, with ~2.5%, and Mrs. Nighat Naseem ~3%.


Stability

The Company's ownership is perceived as stable due to the significant stakes held by the founding sponsors, which guarantees a clear succession plan.


Business Acumen

The sponsors brings decade of experience across the textile sector. Fazal Group 'renowned textile Group in Pakistan operates a diverse range of businesses, including its flagship Company, Fazal Cloth Mills Ltd and Fazal Farms (Pvt) Limited.


Financial Strength

The sponsoring group holds a significant position within Pakistan’s corporate sector, with diversified interests in textiles, fertilizers, energy, and trading. The group possesses considerable financial strength, demonstrating its capacity to support Fazal Holdings when necessary.


Governance
Board Structure

The Company’s Board of Directors is composed of three members from the sponsoring family, lacking independent directors on Board. This small Board size, combined with the dominance of family members and the absence of independent oversight, highlights potential areas for improvement in the Company’s overall governance framework.


Members’ Profile

Mr. Rahman Naseem, a distinguished member of the Board of Directors, possesses over 20 years of extensive experience in the textile and fertilizer industries. Mr. Sheikh Naseem has 48 years of experience and holds the position of Chairman of the Board at Fazal Cloth Mills, while Mr. Aamir Naseem More than two decades of experience in textile industry and one decade experience in fertilizer industry.


Board Effectiveness

There were 4 board meetings held during FY25, with all three members attending it. The minutes from these meetings were properly documented. However, considering the Company's investment portfolio, the lack of board sub-committees highlights an opportunity to enhance the governance framework


Transparency

The external auditor, M/s Shinewing Hameed Chaudhri & Co, have expressed unqualified opinion on the financial statements of FY24. The firm is QCR rated and is on SBP panel of auditor’s category 'B'


Management
Organizational Structure

The Company has established a well-structured organizational framework. All divisional heads report directly to the CEO, who, in turn, reports to the Board of Directors. The operational functions encompass Accounts, Finance, Compliance, Management Information Systems (MIS), and Human Resources.


Management Team

Mr. Naseem Ahmed, CEO of Fazal Holdings, has over 5 decades of experience in textile and in fertilizer sector. He has the directorship of other Fazal group companies. Mr. Azam, CFO, is an FCA and FCMA with a long association of over two decades with the Fazal group of companies. He also heads the finance division of other group companies.


Management Effectiveness

Currently the management has no committees in place; however, they generate daily, weekly, and monthly reports to effectively monitor the performance of the investment portfolio and support senior management. These reports play a crucial role in facilitating informed decision-making regarding the shortterm trading portfolio.


Control Environment

The internal audit function is organized at the Group level. Management oversees investment policy and risk management, with Director Mr. Rehman Naseem responsible for setting investment management procedures and formulating risk management policies. These practices highlight the need for improvements in the control environment of Fazal Holdings.


Investment Strategy
Investment Decision-making

The management team, consisting of the CEO, Director, and CFO, is responsible for making investment decisions for the Company. In addition, various brokerage firms primarily provide advisory services related to investments.


Investment Policy

Fazal Holdings strategy to diversify its investments over various sectors primarily blue-chip investments keeps market risk in check. The Company has a conservative investment strategy as it focuses on investing in the listed scrips mostly. These include commercial banks, mutual funds, and fertilizer companies. The Company preserves liquidity through its sufficient dividend income and by holding short-term listed securities.


Investment Committee Effectiveness

The Company lacks a formal investment committee, however, management meetings to take investments decisions are conducted on a need-basis for making investment decisions of the Company.


Business Risk
Diversification

The Company's investment portfolio comprises 1) Strategic Investments (73% of the total investment value), 2) Trading Investments (27% of the total investment value). The Company has diversified its trading investment portfolio to mitigate risk, with exposures spread across key sectors such as fertilizers, commercial banking, oil and gas, power, and chemicals.


Portfolio Assessment

The Company's long-term investments comprise of listed and unlisted related parties (strategic portfolio). Total value of the Company's investments stood at PKR 33bln as of FY25. The Company's major Strategic investment - Fazal Cloth Mills Limited ('FCML'), Fazal Group's flagship entity -posted a PAT of PKR 117mln during FY25.


Income Assessment

During FY25, the Company's total investment income witnessed significant increase and stood at PKR 6.9bln (FY24: PKR 5.1bln) mainly due to the decrease in income from dividend to PKR 1.07bln (FY24: PKR 1.1bln) and unrealized gain on investment of PKR 5.3bln (FY24: PKR 3.3bln). The Company's dividend income witnessed a decrease and stood at PKR 1.07bln during FY25 (FY24: PKR 1.1bln) resulting from trading portfolio.


Financial Risk
Coverages

In FY25, the Company achieved an improved coverage ratio of 2.4x, up from 1.7x in FY24, driven by strong free cash flows resulting from enhanced profitability. This improvement underscores the Company’s ability to meet its financial obligations more comfortably. Additionally, the consistent dividend stream contributes to alleviating liquidity concerns, providing shareholders with regular returns while maintaining financial stability


Capital Structure

The Company maintained a low leveraged capital structure, relying primarily on short-term borrowings from various banks to meet its investment needs. Total debt increased to PKR 4.6bln (FY24: PKR 1.7bln), reflecting higher borrowings during the year. Meanwhile, the equity base strengthened significantly, expanding from PKR 14bln to PKR 24bln in FY25. Consequently, the leverage ratio increased to around 15.8% (FY24: 10.3%), indicating a moderate rise in financial risk; however, the Company continues to exhibit sound capitalization and strong equity coverage despite the higher debt levels.


Consolidated Position

The Company derives its financial strength from Fazal Group and associated companies. The Company’s strategic investment of Fazal Cloth is its flagship investment with enhanced operations of Fazal Cloth Mills Limited from spinning to composite. At group level, Fazal Group has a considerable presence in the local textile industry
 
 

Nov-25

www.pacra.com

Fazal Holdings (Pvt.) Limited

financial summary

(PKR mln)

Logo

Jun-25
12M		 Jun-24
12M		 Jun-23
12M
Audited Audited Audited
A. BALANCE SHEET
1. Investments 21,426 9,586 6,296
2. Related Party Investments 12,052 11,345 11,420
3. Non-Current Assets 0 0 1
4. Current Assets 201 246 247
5. Total Assets 33,679 21,177 17,964
6. Current Liabilities 528 472 382
7. Borrowings 4,654 1,702 3,012
8. Related Party Exposure 257 817 630
9. Non-Current Liabilities 3,366 3,366 2,398
10. Net Assets 24,875 14,820 11,541
11. Shareholders' Equity 24,875 14,820 11,541
B. INCOME STATEMENT
1. Total Investment Income 6,926 5,630 (151)
a. Cost of Investments (392) (587) (618)
2. Net Investment Income 6,535 5,043 (768)
a. Other Income 5,809 0 0
b. Operating Expenses (15) (14) (130)
4. Profit or (Loss) before Interest and Tax 12,329 5,029 (898)
a. Taxation (274) (1,311) (554)
6. Net Income Or (Loss) 12,055 3,718 (1,453)
C. CASH FLOW STATEMENT
a. Total Cash Flow 919 1,022 636
b. Net Cash from Operating Activities before Working Capital Changes 457 357 103
c. Changes in Working Capital (715) 45 (25)
1. Net Cash provided by Operating Activities (258) 402 78
2. Net Cash (Used in) or Available From Investing Activities (133) 720 (86)
3. Net increase (decrease) in long term borrowings 2,700 0 0
4. Net Cash (Used in) or Available From Financing Activities 391 (1,124) 6
5. Net Cash generated or (Used) during the period 0 (2) (2)
D. RATIO ANALYSIS
1. Performance
a. Asset Concentration (Market Value of Largest Investment / Market Value of Equity Investments) 79.7% 83.7% 38.0%
b. Core Investments / Market Value of Equity Investments 20.3% 2.0% 4.0%
c. Marketable Investments / Total Investments at Market Value 160.2% 58.0% 54.8%
2. Coverages
a. TCF / Finance Cost 2.4 1.7 1.0
b. TCF / Finance Cost + CMLTB 2.4 1.7 1.0
c. Loan to Value (Funding / Market Value of Equity Investments ) 3.4 0.1 0.4
3. Capital Structure (Total Debt/Total Debt+Equity)
a. Leveraging [Funding / (Funding + Shareholders' Equity] 15.8% 10.3% 20.7%
b. (Funding + Off Balance Sheet Exposure) / Shareholders' Equity 18.7% 11.5% 26.1%
E. NOTES
1
2
3
4
5
6
7
8
9
10

Nov-25

www.pacra.com

Fazal Holdings (Pvt.) Limited

rating scale

Logo

Nov-25

www.pacra.com

Fazal Holdings (Pvt.) Limited

regulatory disclosure

Logo
  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))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  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))
  7. Proprietary Information
    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.

Nov-25

www.pacra.com