Azgard Nine Limited (“ANL” or “the Company”) is a publicly listed Company, with its shares traded on the Pakistan Stock Exchange.

The Company began commercial production in 1997 as Legler Nafees Denim Mills Limited, a joint venture between the Colony Group of Pakistan, pioneered by the Sheikh family, and Legler Spa, Italy. In 2004, the Company’s name was changed to Azgard Nine Limited (ANL) to reflect the reduced role of Legler Spa in its operations and signifying the Company’s emergence with its own distinct identity.

The Company’s operations encompass spinning, weaving, dyeing, washing and garment stitching. It has two manufacturing facilities with a combined production capacity of 3,776 rotors, 242 looms, and 2,696 stitching machines, located at 2.5 KM, Manga Raiwind Road, and 18 KM, Atta Buksh Road, Lahore. The Company’s registered office is at Ismail, Aiwan-e-Science, Off Shahrah-e-Roomi, Lahore. In the coming years, management aims to achieve a targeted annual production of approximately 15 million pieces in the apparel segment.

The Company's majority shareholding is held by Mr. Ahmed Humayun Sheikh (29.25%) and Jahangir Siddiqui & Co. Limited (24.96%), while the remaining stake rests with the other shareholders (45.79%).

The Company’s ownership structure has remained largely stable since its inception and is anticipated to remain consistent in the foreseeable future. The shareholding pattern continues to be dominated by the sponsoring family, reflecting the family control and long-term strategic commitment. To ensure continuity and clarity, the majority stake, held by Mr. Ahmed Humayun Shaikh, will be gradually transferred to his children as the children come of age and stature.

Mr. Ahmed has been associated with ANL since its inception and brings over three decades of extensive experience in the textile industry. Under the strategic direction and continued support of the sponsoring shareholders, the Company has demonstrated resilience and consistent topline growth over the years.

In case of liquidity pressures, the Company is expected to manage its requirements through internal cash flows and available external financing avenues, consistent with practices observed in publicly listed companies. The sponsors have previously demonstrated their commitment through participation in the rights issue.

The overall control of the Board vests in its eight members, including the CEO. The Board’s composition comprises five non-executive directors, two independent directors, and one executive director, reflecting the essence of a strong corporate governance framework.

Mr. Zahid Mahmood holds a bachelor’s degree in Mathematics and Statistics from Forman Christian College & the University of the Punjab, Lahore. He is a Fellow Member of the Institute of Chartered Accountants of Pakistan (ICAP) with over 25 years of diversified experience spanning finance, SAP ERP implementation, joint ventures, and investment management. Mr. Ahmed Humayun Shaikh holds a bachelor’s degree in Economics from Brown University, USA, and brings more than three decades of management experience. Mr. Abid Hussain, an entrepreneur with over 25 years of professional experience, serves as the Chief Executive Officer and Director of Sign Source Limited (SSL). He holds a Master’s degree in Business Administration. Mr. Ihsan Ahmad holds a bachelor’s degree in Mechanical Engineering from the University of Engineering & Technology (UET), Lahore, and a Master’s degree in Industrial Engineering and Management from the Asian Institute of Technology, Bangkok. He has previously been associated with Pakistan Tobacco Company Limited, Pakistan Engineering Company Limited, and Panther Tyres Limited. Ms. Maliha Sarda Azam is an Advocate of the High Courts and serves as Legal Consultant to various corporate clients. She previously worked with the Securities and Exchange Commission of Pakistan (SECP) in 2007 and possesses extensive experience in domestic and international corporate and financial transactions, including joint ventures, franchising, and commercial contracts. Mr. Nasir Ali Khan Bhatti, a Fellow Chartered Accountant (FCA), has extensive experience across industrial, financial, and services sectors. His expertise covers strategic business planning, budgeting and forecasting, internal control development, management information systems, statutory accounting, and taxation. Mr. Syed Hasan Akbar Kazmi graduated from the Institute of Business Administration (IBA), Karachi, with an MBA and also holds a Master’s degree in Economics from the University of Karachi. He has over 19 years of experience within the JS Group, where he held senior positions in Private Equity, Corporate & Investment Banking, and Principal Finance. Mr. Usman Rasheed holds a bachelor’s degree in Chemical Engineering from the University of Engineering & Technology (UET), Lahore. He has over 20 years of diversified experience encompassing business development, operations, and project management.

In line with best corporate governance practices, the Company has established two Board committees: the Audit Committee and the HR & Remuneration Committee, each comprising three members. Both committees are chaired by an independent director, Mr Ihsan Ahmad. During FY25, the Board of Directors (BoD) convened four meetings to review the Company’s financial performance, monitor strategic progress, and assess compliance with its established objectives. The Audit Committee has been assigned responsibilities relating to the Risk and Internal Controls Governance Framework through the Board-approved Risks and Internal Controls Governance Policy and met on a quarterly basis. The HR & Remuneration Committee has been assigned responsibilities for Sustainability and DE&I, and it convened twice during the year. Attendance was high among all members, indicating the Board’s active engagement and commitment. The minutes of all BoD meetings are formally documented.

The Company has appointed M/s Rahman Sarfaraz Rahim Iqbal Rafiq (Category “A” firm on the State Bank of Pakistan Panel of Auditors) as its external auditors, aligning with high standards of transparency. Meanwhile, the Company has outsourced its internal audit function to M/s PKF F.R.A.N.T.S Chartered Accountants, which reports directly to the Board’s Audit Committee, reflecting independent oversight.

The Company maintains a well-defined organizational structure with clear reporting lines to ensure seamless coordination and the smooth execution of business operations. At the top of the hierarchy, the Technical Director, Director Finance, Corporate HR Head, Chief Operating Officer (COO), and CFO Operations report directly to the Chief Executive Officer (CEO), Mr. Ahmed Humayun Sheikh. Under the leadership of the COO, Mr. Munir Alam, the Denim Business Unit Head, Garment Business Unit Head, and Head of Sales manage their respective divisions.

The Chief Executive Officer (CEO), Mr. Ahmed Humayun Shaikh, holds a bachelor’s degree in Economics from Brown University, USA, and brings with him over three decades of extensive management experience. The Chief Operating Officer (COO), Mr. Munir Alam, holds a bachelor’s degree in Textile Engineering and has nearly two decades of professional experience in the industry. They are supported by a team of highly qualified and seasoned professionals.

The Company does not have formal management committees in place; however, the top management meets on a weekly basis to review operations across all departments. During these meetings, weekly targets and performance reports are evaluated by senior management to identify challenges and address potential issues proactively. Department-wise reports on production, work-in-progress (WIP), and other key operational metrics are presented through real-time dashboards.

The Company has deployed an Oracle-based E-Business Suite (EBS) Release 12, with several modules upgraded from 11i to R12 by Azeemi Technologies in 2024. The upgraded modules cover Supply Chain Management (SCM), including Procurement and Inventory, and Financials, including Accounts Receivable, Accounts Payable, General Ledger, and Fixed Assets. For the HR department, Human Capital Management (HCM) is currently under development and implementation by Vision Plus Limited, scheduled for 2024–25.

The Company upholds a robust control environment to ensure that all products meet stringent international quality standards. The Company has earned multiple globally recognized accreditations, including OEKO-TEX® Standard 100, GOTS (Global Organic Textile Standard), ISO 9001:2015, BCI (Better Cotton Initiative), Amfori BSCI (Business Social Compliance Initiative), and Global Recycled Standard (GRS), and others, reflecting its strong commitment to quality, sustainable business practices.

Textile exports reached USD 17.9 billion during FY25, a modest rise from USD 16.7 billion the previous year, reflecting a 7.2% year-over-year growth. The largest contribution came from the composite and garments segment, at USD 14 billion, which included the weaving segment at USD 1.8 billion and the spinning segment at USD 0.7 billion. The production of cotton cloth in FY25 declined by approximately 0.7% year over year, reaching around 877.1 million 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.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.

The Company has an overall production capacity of 3,776 rotors, 242 looms, and 2,696 stitching machines and falls in the mid-tier of the respective industry.

Over the years, the Company’s topline has maintained an upward trajectory, reaching PKR 40.6 billion in FY25 (FY24: PKR 36.5 billion), reflecting a three-year CAGR of 9.0% (FY23–FY25). The year-on-year growth of 11.2% was primarily driven by a significant increase in volumes within high-potential, value-added segments. The Company’s revenue base remains predominantly export-oriented, with only a minimal contribution from domestic sales. Indirect sales contributed PKR 9.3 billion, accounting for approximately 23% of total revenue. In terms of volumes, the apparel segment continues to outperform other business lines, with denim jeans serving as the Company’s flagship product in international markets. The Company exports primarily to Switzerland, Denmark, Russia, Italy, Germany, Portugal, Bangladesh, Indonesia, and other countries. The Company has established a stable and diversified international clientele, which includes globally recognized brands such as ZARA, Pull & Bear, ONLY, MANGO, MUSTANG, BLEND, NEW YORKER and NEXT. The Company's top 10 client concentration within the apparel segment remains at a moderate level, reflecting a balanced customer portfolio and low client concentration risk. In 1QFY26, the Company's revenue base stood at PKR 9.4bln, slightly lower than PKR 10.1bln during the same period.

In FY25, the Company’s gross profit margin remained largely stable at 12.3% (FY24: 12.6%), reflecting resilience in operational performance. The Company faced headwinds from elevated energy tariffs and a revision in the minimum wage rate, which exerted pressure on cost structures. However, the operating profit margin improved slightly to 5.2% (FY24: 4.9%) owing to effective cost control measures and disciplined expense management. Additionally, the divestment of surplus funds into bank deposits provided support to the profitability profile, although this gain was partially offset by notional interest expenses and provisions for various levies. Despite these pressures, the bottom line showed a modest improvement, with profit after tax rising to PKR 702 million (FY24: PKR 675 million), while the net profit margin stood at 1.7% (FY24: 1.8%). In 1QFY26, the Company recorded a gross profit margin of 11.4% (1QFY25: 12.4%) and a net profit margin of 1.2% (1QFY25: 0.7%).

To mitigate the risk of rising energy costs, the management has invested in multiple renewable energy projects aimed at enhancing the Company’s environmental sustainability footprint. Among these initiatives, a 2.5 MW solar power project is already operational, while a 6 MW biomass project is currently in process and is expected to become operational by December 2026.

The Company finances its working capital requirements through a mix of internally generated cash flows and short-term borrowings. In 1QFY26, the Company’s net working capital cycle improved to 49 days (FY25: 54 days), primarily driven by inventory cycle optimization to 35 days (FY25: 42 days). The Company continues to maintain sufficient borrowing capacity, as reflected in the short-term trade leverage ratio of 58.3% (FY25: 57.9%). Despite the ongoing restructuring obligations, the Company has sustained its overall liquidity position, with a current ratio of 3.6x (FY25: 3.5x), indicating an adequate repayment capacity to meet its short-term obligations.

In 1QFY26, the Company’s free cash flows from operations amounted to PKR 542 million (FY25: PKR 2.4 billion). However, despite a limited reliance on external funding sources, the Company’s debt coverage indicators remain under pressure, primarily as a result of the restructured borrowings and the quantum of outstanding debt obligations. The Company’s payback period was recorded at 2.9 years (FY25: 2.7 years), indicating a marginal increase in repayment duration.

The Company has maintained a leveraged capital structure, with its debt profile comprising a mix of subsidized short-term financing facilities from the State Bank of Pakistan (SBP) and debt instruments. In 1QFY26, the Company’s total leverage ratio remained unchanged at 35.1%. Of this, short-term borrowings accounted for approximately 34.6%, amounting to PKR 2.7 billion (FY25: PKR 2.6 billion), primarily under the Export Refinance Facility (ERF) Scheme. The Company’s equity base further strengthened to PKR 14.9 billion (FY25: PKR 14.8 billion).