Masood Fabrics Limited

RATING REPORT | Mar-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
30-Mar-26 BBB- A3 Stable Downgrade -
28-Mar-25 A- A2 Stable Maintain -
29-Mar-24 A- A2 Stable Maintain -
30-Mar-23 A- A2 Stable Maintain -
30-Mar-22 A- A2 Stable Maintain -
About the Entity

Masood Fabrics Limited ("Masood Fabrics" or "the Company") is a public unlisted company incorporated in May, 1998. The Company operates with the production facility of 32,880 spindles and 260 looms. Mr. Khawaja Jalaluddin Roomi (late), the Company’s CEO oversaw the Company’s operations. His son, Khawaja Najamuddin Roomi is involved in the Company's operations as the Executive Director.

Rating Rationale

Masood Fabrics Limited (“the Company” or “MFL”) experienced a weakening in its credit profile as per information shared by the management. The revision in ratings reflects a combination of heightened uncertainty surrounding the Company’s current risk position, alongside emerging pressures observed across its operating environment. The inability to obtain adequate and timely information, despite sustained engagement efforts, has constrained visibility into the Company’s latest financial and operational standing, thereby limiting the rating assessment framework. In such circumstances and accompanied by a significant decline in cash generation capacity, the continuation of the previously assigned ratings is deemed less tenable.
The textile sector continues to operate under a challenging backdrop, characterized by demand-side pressures, elevated input costs, and liquidity constraints across the value chain. While the impact varies across industry participants, entities with constrained financial flexibility and limited access to funding avenues remain relatively more exposed. In this context, concerns are accentuated for the Company, particularly given indications of stress within associated group entities, where elevated utilization of available credit lines has been observed, potentially constraining financial maneuverability at the group level.
The Company’s available financial information, primarily comprising management accounts for the period ended FY25, reflected a weakening trajectory in key performance indicators. The topline contracted, while margins remained under pressure, translating into a subdued profitability profile. Despite some moderation in finance costs, coverage indicators remained stretched, and the capital structure continued to reflect a leveraged position. Furthermore, earlier financial projections have not consistently translated into realized performance in prior periods, indicating executional challenges under prevailing conditions.
Moreover, the broader global environment remains risky. Persistently high energy costs, imposition of US tariffs, coupled with evolving dynamics in regional energy markets, continue to pose challenges to cost structures within the textile sector. These factors, when viewed alongside tightening liquidity conditions in the financial system, influence the Company’s access to external funding and overall financial flexibility. While funding relationships remain, a degree of caution appears to be emerging within the financial ecosystem, which has implications for entities operating with already elevated leverage and working capital intensity.
The governance framework of the Company is understood to be driven by the sponsoring group; however, the frequent transitions in the group-level management have been witnessed as well.

Key Rating Drivers

Going forward, the provision of comprehensive and timely financial information, including audited financial statements and updates on liquidity and funding arrangements, will be critical in enabling a more accurate assessment of its credit profile.

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

Masood Fabrics Limited


Rating Analysis

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Profile
Legal Structure

Masood Fabrics Limited (“Masood Fabrics” or “the Company”) was incorporated in 1998 as a public unlisted limited company.


Background

The Company was originally a venture of the Mahmood Group, established in 1935. Over time, the Group expanded from tannery operations into the broader cotton value chain (growing to finished products), along with presence in real estate and food segments. Subsequently, Masood Fabrics became part of the Masood-Roomi Group, formed in April 2021.


Operations

Masood Fabrics is primarily engaged in the manufacturing and sale of greige fabric and yarn, with an installed capacity of ~32,880 spindles and 260 looms. In addition, the Company maintains an investment portfolio, including exposure to real estate and equity markets. Power requirements are partially met through a mix of captive generation and solar capacity (~10–11MW combined). The registered head office is located at 5-Officers Colony, Multan.


Ownership
Ownership Structure

The ownership of the Company rests with the family of late Mr. Khawaja Jalaluddin Roomi. Mr. Jalaluddin held a majority stake (~77.28%), while the remaining shareholding is distributed among close family members.


Stability

The ownership structure remains concentrated within the sponsoring family, providing continuity. However, further formalization, such as the development of a family constitution, may enhance long-term stability and governance clarity.


Business Acumen

Mr. Khawaja Jalaluddin Roomi possessed extensive experience spanning over three decades, with exposure across public and private sector organizations. His involvement provided strategic direction; however, evolving business dynamics necessitate continued adaptability at both operational and strategic levels.


Financial Strength

Masood Fabrics is part of the Masood-Roomi Group, which includes other textile and holding entities. While group association provides potential support avenues, emerging pressures within certain group entities may influence the extent and timeliness of such support.


Governance
Board Structure

The Board comprises five members, primarily from the sponsoring family. The dual role of Chairman and CEO was held by Mr. Khawaja Jalaluddin Roomi. The absence of independent directors and board-level committees indicates room for improvement in governance oversight.


Members’ Profile

Board members possess experience across the textile value chain and related sectors. Their combined expertise provides operational insight; however, the inclusion of independent perspectives may further strengthen decision-making processes.


Board Effectiveness

Board meetings are regularly conducted with satisfactory attendance. Nonetheless, the absence of formal board committees limits structured oversight in key areas.


Financial Transparency

Historically, the Company’s financial statements have been audited by reputable auditors. However, the availability of updated audited financial statements remains critical for maintaining transparency and supporting an informed credit assessment.


Management
Organizational Structure

The Company follows a centralized organizational structure, with key functional areas reporting to senior management. While this supports control, it may limit agility in a dynamic operating environment.


Management Team

The management team is led by the CEO and supported by experienced professionals across functional areas. Continued stability and depth within the management team remain important, particularly in light of evolving business conditions.


Effectiveness

Formal management meetings are conducted; however, the absence of structured management committees may limit specialized oversight.


MIS

The Company operates an ERP system (Oracle-based), supporting integration across functions.


Control Environment

Internal controls are in place; however, effectiveness is contingent upon timely and accurate data flow, which remains a key consideration.


Business Risk
Industry Dynamics

The textile sector continues to operate under pressure, driven by weak global demand, elevated energy costs, and changing regulatory and taxation frameworks. Additionally, evolving global trade dynamics and energy market uncertainties continue to impact cost structures and competitiveness.


Relative Position

The Company operates as a small to mid-tier player within the textile value chain, with primary exposure to spinning and greige fabric segments. Limited presence in value-added segments constrains margin resilience relative to diversified peers.


Revenues

Based on the last available information, the Company’s topline has exhibited a declining trend, reflecting pressure on both volumes and pricing dynamics. The revenue mix remains tilted towards exports; however, demand variability and pricing pressures have impacted overall sales performance. In the absence of audited financial information, the current trajectory remains uncertain.


Margins

Profitability indicators have weakened over recent periods, primarily due to elevated input costs, particularly energy and finance costs. Margins remain susceptible to fluctuations in pricing power and cost pass-through ability. The sustainability of margins remains uncertain in the prevailing operating environment.


Sustainability

The Company had undertaken initiatives such as solar installation and BMR activities to manage cost pressures. While these measures provide some cushion, their effectiveness in fully offsetting external pressures remains to be seen. Additionally, divestment of investment portfolio may support the operations in the time of need.


Financial Risk
Working capital

The Company’s working capital cycle has historically remained elongated, reflecting high inventory and receivable days. This results in reliance on short-term borrowings to support operations. In the absence of updated financial information, the current working capital position cannot be fully assessed.


Coverages

Coverage indicators have weakened in recent periods, driven by declining profitability and elevated finance costs. While some moderation in finance costs was observed, overall debt servicing capacity remains under pressure. The lack of updated financial information limits visibility on the current coverage position.


Capitalization

The Company has historically maintained a leveraged capital structure, with borrowings forming a significant portion of total capital. Given the pressures on profitability and cash flow generation, the sustainability of this leverage profile remains a key consideration. The absence of recent audited financials constrains a precise assessment of the current capitalization position.
 
 

Mar-26

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Masood Fabrics Limited


Financial Summary

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(PKR mln)


 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
A. BALANCE SHEET
1. Non-Current Assets 7,706 7,950 7,206
2. Investments 4,508 5,222 5,240
3. Related Party Exposure 3,306 3,406 3,181
4. Current Assets 14,822 13,617 13,648
a. Inventories 7,795 6,936 9,110
b. Trade Receivables 4,636 3,409 1,775
5. Total Assets 30,342 30,195 29,275
6. Current Liabilities 2,502 2,726 3,290
a. Trade Payables 1,407 1,199 1,819
7. Borrowings 17,620 17,303 16,176
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 0 0 0
10. Net Assets 10,220 10,167 9,808
11. Shareholders' Equity 10,220 10,167 9,808
B. INCOME STATEMENT
1. Sales 20,637 24,955 25,366
a. Cost of Good Sold (17,672) (21,038) (20,324)
2. Gross Profit 2,965 3,917 5,042
a. Operating Expenses (1,048) (1,061) (1,215)
3. Operating Profit 1,916 2,856 3,827
a. Non Operating Income or (Expense) 502 1,284 241
4. Profit or (Loss) before Interest and Tax 2,418 4,141 4,068
a. Total Finance Cost (2,218) (3,674) (2,330)
b. Taxation (147) (309) (376)
6. Net Income Or (Loss) 53 158 1,361
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 2,965 2,975 3,633
b. Net Cash from Operating Activities before Working Capital Changes 747 (657) 1,548
c. Changes in Working Capital 25 (624) 983
1. Net Cash provided by Operating Activities 771 (1,281) 2,531
2. Net Cash (Used in) or Available From Investing Activities 427 144 (1,917)
3. Net Cash (Used in) or Available From Financing Activities (1,269) 1,126 (483)
4. Net Cash generated or (Used) during the period (71) (11) 131
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -17.3% -1.6% 5.0%
b. Gross Profit Margin 14.4% 15.7% 19.9%
c. Net Profit Margin 0.3% 0.6% 5.4%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 14.5% 9.4% 18.2%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 0.5% 1.6% 14.9%
2. Working Capital Management
a. Gross Working Capital (Average Days) 201 155 167
b. Net Working Capital (Average Days) 178 133 140
c. Current Ratio (Current Assets / Current Liabilities) 5.9 5.0 4.1
3. Coverages
a. EBITDA / Finance Cost 1.4 0.9 1.8
b. FCFO / Finance Cost+CMLTB+Excess STB 0.9 0.6 1.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 8.2 -11.1 4.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 63.3% 63.0% 62.3%
b. Interest or Markup Payable (Days) 70.8 62.0 93.2
c. Entity Average Borrowing Rate 12.3% 21.1% 13.2%

Mar-26

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Masood Fabrics Limited


Rating Scale

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Mar-26

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Masood Fabrics 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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  3. Conduct of Business
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Mar-26

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