Ahmad Hassan Textile Mills Limited

RATING REPORT | Dec-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
27-Dec-25 BBB+ A2 Stable Maintain -
27-Dec-24 BBB+ A2 Stable Maintain -
29-Dec-23 BBB+ A2 Stable Maintain -
30-Dec-22 BBB+ A2 Stable Initial -
About the Entity

Ahmad Hassan Textile Mills Ltd., a listed concern, commenced operations in 1989. The Company is engaged in the manufacturing of greige fabric, operating with 171 looms. The majority stakes (57%) of the Company are held by Mr. Javed’s family. The Company has a seven-member board, primarily composed of members from the sponsoring family, with two independent directors. The board is chaired by Mrs. Salma Javed, while the CEO, Mr. Muhammad Harris, oversees the Company’s affairs.

Rating Rationale

The assigned ratings of Ahmad Hassan Textile Mills Limited (“AHTML” or “the Company”) reflect its adequate positioning within Pakistan’s textile sector. AHTML is primarily engaged in the manufacturing of a diversified range of fabric products, including Twills, HB, Panama, BFC, Satins, CVC, and Canvas. The Company is managed by a team of seasoned professionals overseeing its operational functions. Since inception, AHTML has maintained a stable business risk profile.
During FY25, the Company recorded a topline of PKR 5.6bln (FY24: PKR 5.1bln; 1QFY26: PKR 1.2bln), translating into a year-on-year (YoY) growth of ~10.8%, largely supported by improved pricing dynamics. The sales mix remains predominantly skewed towards the domestic market, with local sales—including indirect exports—accounting for approximately 91.2% of total gross revenues, while the remaining portion comprises direct exports. The Company’s export footprint spans the U.S., Europe, and Asia. Its major customers include Sarena Textile Industries (Pvt.) Ltd, Saya Weaving Mills Ltd, Meraj Fatima Fabrics (Pvt) Ltd, H. Y Enterprises, Mak Fabrics, Imran Brothers Textile (Pvt.) Ltd, A.B. Export (Pvt) Ltd, and Maypole (Pvt) Ltd. Gross margins of the Company witnessed an improvement, primarily attributable to more efficient raw material procurement practices. Additionally, a lower tax charge positively impacted bottom-line performance, with net profitability increasing to PKR 94mln in FY25 (FY24: PKR 40mln, 1QFY26: PKR 21mln). During the year, management undertook capital expenditures focused on energy efficiency initiatives, which are expected to rationalize energy costs and provide additional resilience within the cost structure. Furthermore, the Company is contemplating the execution of BMR through the installation of new looms, aimed at enhancing its sustainability profiles. However, the proposed funding structure and its resultant impact on the Company’s financial metrics remain key considerations. The financial risk profile of the Company is assessed as adequate, supported by a moderately leveraged capital structure. AHTML has effectively managed its net working capital requirements through a prudent mix of short-term borrowings and internally generated cash flows. The Company’s cash flow generation and debt service coverage indicators remain adequate.

Key Rating Drivers

The ratings are dependent upon the management's ability to capitalize on growth opportunities in a competitive landscape, operate at an optimal level, and improve margins and coverages, going forward. The company is expected to adhere. Adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

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

Ahmad Hassan Textile Mills Limited

rating analysis

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Profile
Legal Structure

Ahmad Hassan Textile Mills Limited was incorporated on December 03, 1989, as a public limited company. The Company is listed on the Pakistan Stock Exchange.


Background

Established in 1989 by the late Mr. Ahmad Hassan, Ahmad Hassan Textile Mills Limited has emerged as a prominent fabric manufacturer with a distinguished history spanning over three decades within the textile industry. Following a demerger in 2021, the weaving business is retained by the Company whereas the spinning business was transferred to Ahmed Hassan Spinning Limited.


Operations

The Company operates with 171 Looms. BMR and the upgradation of machinery were done over the course. Currently, 159 looms are operating. The total energy requirement of the Company is 2.5MW which is wholly met through WAPDA at the capacity of 7.5MW and internal power generation through a 3MW gas-based and 2.8MW Solar power plant. The production facility is located at M.M Road, Chowk Sarwar Shaheed, District Muzaffargarh.


Ownership
Ownership Structure

The sponsoring family holds a majority stake in the Company (57.1%) through individual holdings while the remaining shares are held by the general public (31.1%) and others (11.8%), including a 10.7% stake held by NIT.


Stability

The company has a structured line of succession, reflected by the equalized distribution of shareholding among Mr. Javed’s family members. Meanwhile, the third generation has already been in business, serving in various capacities. No changes in the ownership structure are anticipated in the near future.


Business Acumen

AHTML, one of Pakistan's longest-established small-scale textile houses, has been operating under the stewardship of the late Mr. Ahmad Hassan’s family for over three decades. Over this period, the company has developed significant expertise in weaving and successfully expanded its operations, demonstrating resilience and adaptability within the highly competitive textile industry


Financial Strength

As the flagship Company of its sponsors, it benefits from unwavering support when required. Over the years, the provision of subordinated loans by the sponsors has further demonstrated their ongoing commitment and backing for the Company.


Governance
Board Structure

AHTML's board comprises seven members. Five members are from the sponsoring family. Three members are non-executive directors, two directors carry the executive role and two are independent directors. Mrs. Salma Javed serves the role of Chairperson. The inclusion of independent oversight has strengthened the governance of the Company.


Members’ Profile

Mr. Muhammad Haris – the CEO – carries with him almost three decades of experience in the local textile industry. The board members have a vast knowledge of the textile industry,  though diversity in experiences exists as well. The directors’ expertise in different stages of the textile value chain benefits the board for efficient decision-making.


Board Effectiveness

Two committees; Audit and HR, are in place to assist the board in relevant matters and ensure proper oversight. Attendance of board members remains strong and meeting minutes were formally documented.


Financial Transparency

M/s. Yousuf Adil, Chartered Accountants, are the external auditors of the Company. They have expressed a qualified opinion on the financial statements of the Company for the year ended June 30th, 2025 on the grounds of payment of gratuity.


Management
Organizational Structure

The Company has an established organizational layout, with overall operations divided into various functional departments, namely: (i) Marketing, (ii) Finance, (iii) Administration & HR, (iv) Accounts, and (v) Commercial (fixed asset procurement). Department heads predominantly report to the Chief Financial Officer (CFO) or the Technical Director (Operations), who subsequently report to the Chief Executive Officer (CEO).


Management Team

The management team is headed by the CEO Muhammad Haris who also holds a degree of MBBS. He is well versed in the textile business providing requisite acumen. He is supported by a team of seasoned professionals, who supplement his expertise. Mr, Jamal Ahmad, the CFO of the Company is a chartered accountant by profession and possesses ~20 years of experience.


Effectiveness

The management meetings are held daily with follow-up points to resolve or proactively address operational issues, if any, eventually ensuring a smooth flow of operations. The Company’s MIS can be classified into categories based on periodicity – Daily, and Monthly.


MIS

The Company has implemented Oracle-based ERP software which integrates the flow of information between various business processes and integrates business transactions with the company’s financial system in real-time.


Control Environment

Ahmad Hassan Textile is accredited with local and international certifications for compliance. The Company follows the latest Quality Assurance Standards for fabric production and trade.


Business Risk
Industry Dynamics

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. In FY25, the transition from the final tax regime to the normal tax regime is set to impact the profitability of export-oriented units, with a 29% tax on profits and an additional super tax of up to 10%. The consistent decline in policy rates over the last two quarters, along with the anticipation of further reductions, is expected to provide a cushion in the financial metrics of the industry.


Relative Position

Ahmad Hassan Textile is the flagship company of the Ahmad Hassan Group. The Group has a long history of operations in Pakistan’s spinning and weaving sectors. This strengthens the Company’s market position. However, on a standalone basis, Ahmad Hassan's share in the local weaving industry is one of the minimal in the relative universe


Revenues

During FY25, the company’s revenues increased by 10.8% YoY to stand at PKR 5,626mln (FY24: PKR 5,078mln, 1QFY26: PKR 1,191mln), supported by improved pricing dynamics. The sales mix remains predominantly skewed towards the domestic market, with local sales—including indirect exports—accounting for approximately 91.2% of total gross revenues, while the remaining portion comprises direct exports. The Company’s export footprint spans the U.S., Europe, and Asia. Its major customers include Sarena Textile Industries (Pvt.) Ltd, Saya Weaving Mills Ltd, Meraj Fatima Fabrics (Pvt) Ltd, H. Y Enterprises, Mak Fabrics, Imran Brothers Textile (Pvt.) Ltd, A.B. Export (Pvt) Ltd, and Maypole (Pvt) Ltd.


Margins

During FY25, the company’s gross margins observed improvement to 7.6% (FY24: 6.0%) driven by optimized raw material procurement. This translated to an increase in the operating margin to record at 5.7% (FY24: 3.9%). The finance cost of the company increased to PKR 161mln (FY24: PKR 132mln). However, the Company's net profitability improved, driven by decreased tax charge, clocking at PKR 94mln (FY24: PKR 40mln). The Company's net margin improved to 1.7% (FY24: 0.8%). During 1QFY26, the Company's gross and net margins stood at 7.5% and 1.8% respectively, with the profit after tax clocking at PKR 21mln. 


Sustainability

During the year, management undertook capital expenditures focused on energy efficiency initiatives, which are expected to rationalize energy costs and provide additional resilience within the cost structure. Furthermore, the Company is contemplating the execution of BMR through the installation of new looms, aimed at enhancing its sustainability profiles.


Financial Risk
Working capital

At end-Jun25, the net working capital cycle improved at 63 days (FY24: 66days) on account of improved inventory days (FY25: 77days, FY24: 85days). The trade assets of the company decreased and clocked at PKR 1,919mln (FY24: PKR 2,052mln). At end-Sept25, the net working capital cycle days stood at 76 days. 


Coverages

During FY25, the company's FCFO  increased to stand at PKR 368mln (FY24: PKR 276mln). The interest coverage increased to 2.5x (FY24: 2.3x), mainly attributable to enhanced cashflows. The debt coverage of the company increased as well at 1,2x (FY24: 1.0x). Whereas, the debt repayment period of the company decreased to 2.0 years (FY24: 2.8 years). During 1QFY26, the free cash flows of the company were recorded at PKR 75mln. The interest coverage of the company stood at 3.7x and the debt coverage at 1.3x. Whereas, the debt repayment period of the company is recorded at 1.9 years.


Capitalization

At end-Jun25, the company's leveraging sizably declined to 23.6% (FY24: 38.3%) as the equity climbed up to PKR 2,330mln (FY24: PKR 1,834mln). The total borrowings of the company have decreased to stand at PKR 658mln (FY24: PKR 1,077mln). ST borrowings constitute 32.3% of total borrowings. At end-Sept25, the leveraging of the company stood at 28.0% as the total borrowings clocked at PKR 854mln. Whereas, the equity base inched up to PKR 2,351mln.
 
 

Dec-25

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Ahmad Hassan Textile Mills Limited

financial summary

(PKR mln)

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Sep-25
3M		 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
A. BALANCE SHEET
1. Non-Current Assets 2,385 2,406 1,719 1,648
2. Investments 0 0 0 0
3. Related Party Exposure 7 16 28 18
4. Current Assets 2,113 2,033 2,156 1,676
a. Inventories 1,330 1,125 1,257 1,116
b. Trade Receivables 285 443 367 226
5. Total Assets 4,505 4,456 3,903 3,343
6. Current Liabilities 867 1,034 846 769
a. Trade Payables 541 668 586 531
7. Borrowings 854 658 1,077 608
8. Related Party Exposure 63 63 63 63
9. Non-Current Liabilities 371 371 84 103
10. Net Assets 2,351 2,330 1,834 1,800
11. Shareholders' Equity 2,351 2,330 1,834 1,800
B. INCOME STATEMENT
1. Sales 1,191 5,626 5,078 4,327
a. Cost of Good Sold (1,102) (5,197) (4,772) (3,958)
2. Gross Profit 89 430 307 370
a. Operating Expenses (29) (110) (109) (107)
3. Operating Profit 60 320 198 263
a. Non Operating Income or (Expense) (3) (54) 35 (16)
4. Profit or (Loss) before Interest and Tax 57 266 233 247
a. Total Finance Cost (22) (161) (132) (87)
b. Taxation (14) (10) (60) (67)
6. Net Income Or (Loss) 21 94 40 93
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 75 368 276 285
b. Net Cash from Operating Activities before Working Capital Changes 48 193 160 201
c. Changes in Working Capital (264) 341 (411) (11)
1. Net Cash provided by Operating Activities (216) 534 (252) 190
2. Net Cash (Used in) or Available From Investing Activities (1) (92) (161) 2
3. Net Cash (Used in) or Available From Financing Activities 196 (126) 381 (97)
4. Net Cash generated or (Used) during the period (21) 317 (31) 94
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -15.3% 10.8% 17.4% -22.0%
b. Gross Profit Margin 7.5% 7.6% 6.0% 8.5%
c. Net Profit Margin 1.8% 1.7% 0.8% 2.1%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -15.9% 12.6% -2.7% 6.3%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 3.6% 4.5% 2.2% 5.3%
2. Working Capital Management
a. Gross Working Capital (Average Days) 122 104 107 205
b. Net Working Capital (Average Days) 76 63 66 155
c. Current Ratio (Current Assets / Current Liabilities) 2.4 2.0 2.5 2.2
3. Coverages
a. EBITDA / Finance Cost 4.8 3.0 3.2 4.6
b. FCFO / Finance Cost+CMLTB+Excess STB 1.3 1.2 1.0 1.7
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 1.9 2.0 2.8 1.6
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 28.0% 23.6% 38.3% 27.1%
b. Interest or Markup Payable (Days) 61.9 45.0 97.3 78.9
c. Entity Average Borrowing Rate 8.3% 14.6% 13.7% 10.0%

Dec-25

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Ahmad Hassan Textile Mills Limited

rating scale

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Dec-25

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Ahmad Hassan Textile Mills 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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