Fazal Holdings (Pvt.) Limited (“Fazal Holdings” or “the Company”) was incorporated in April 1995 under the name Amir Fine Export (Pvt.) Limited. Initially engaged in the trading of yarn, cloth, and securities, the Company underwent a strategic transformation and was rebranded in 2016. It now operates as the holding company of the Fazal Group, overseeing strategic investments in its affiliated entities while also managing a diversified portfolio of short-term investments in both listed and unlisted securities.

The Company’s investment portfolio comprises Strategic Investments (~39%) and Trading Portfolio (~61%). 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.

Fazal Holdings is predominantly owned by the Fazal family, the founding sponsors of the Company. The largest shareholding, ~47.25%, is held by Mr. Rehman Naseem. The family of Mr. Aamir Naseem Sheikh also holds a significant combined stake, with his sons, Mr. Yousaf Aamir and Mr. Abdullah Aamir, each owning ~22% respectively. The remaining shares are distributed among Mr. Sheikh Naseem (~2.5%), Mrs. Nighat Naseem (~3%), and Ms. Mahnaz Amir Sheikh (~2.5%).

The Company's ownership is considered stable, as virtually the entire shareholding is retained by the founding Fazal family, with Mr. Rehman Naseem holding the largest stake and the sons of Mr. Aamir Naseem Sheikh also holding a significant combined stake. The active shareholding of the next generation, Mr. Yousaf Aamir and Mr. Abdullah Aamir, supports a clear and well-defined succession plan. The sponsors' commitment is further reflected in the personal guarantees of the directors extended against the Company's long-term financing.

The sponsors bring decades of experience in the textile sector. Fazal Group is a well-established and reputable textile group in Pakistan, operating across a diverse range of businesses, including its flagship company, Fazal Cloth Mills Limited, as well as Fazal Farms (Pvt.) Limited, Ahmed Fine Textile Mills Limited and Rehman Amir Fabrics Limited.

The sponsoring group holds a prominent position in Pakistan’s corporate sector, with diversified interests spanning textiles, fertilizers, energy, and trading. Its substantial financial strength underscores its ability to provide support to Fazal Holdings whenever required.

The Company’s Board of Directors consists of three members from the sponsoring family and does not include any independent directors. The small board size, coupled with the dominance of family members and the lack of independent oversight, indicates potential areas for enhancement in the Company’s governance framework.

Mr. Rehman Naseem, a prominent member of the Board of Directors, brings over 30 years of extensive experience in the textile and fertilizer industries. He also serves as CEO of Ahmed Fine Textile Mills Limited and Rehman Amir Fabrics Limited. Mr. Sheikh Naseem Ahmed, with over 50 years of experience, serves as the Chairman of the Board at Fazal Cloth Mills Limited (FCML) and as the CEO of Fazal Holdings. Mr. Aamir Naseem contributes more than 20 years of experience in the textile sector alongside 11 years of experience in the fertilizer industry.

During FY25, four board meetings were held, with full attendance from all three members, and the minutes of these meetings were properly documented. However, given the Company’s investment portfolio, the absence of board sub committees presents an opportunity to further strengthen and enhance the governance framework.

The external auditor, M/s ShineWing Hameed Chaudhri & Co., issued an unqualified opinion on the Company’s financial statements for FY25. The firm is QCR rated and listed on the State Bank of Pakistan’s panel of auditors under category ‘B’.

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.

Mr. Sheikh Naseem Ahmed, CEO of Fazal Holdings, brings over 50 years of experience in the textile and fertilizer sectors and serves as a director on the boards of other Fazal Group companies. Mr. Azam, the CFO, is both an FCA and FCMA, with more than 28 years of experience within the Fazal Group. He also leads the finance divisions of other group companies.

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 short-term trading portfolio.

The internal audit function is centralized at the Group level, with management responsible for overseeing investment policies and risk management. Director Mr. Rehman Naseem leads the formulation of investment procedures and risk management policies. Nevertheless, there is scope for further strengthening the Company’s control environment.

The management team, comprising the CEO, Director, and CFO, is responsible for making the Company’s investment decisions. Additionally, various brokerage firms are engaged to provide advisory services related to these investments.

Fazal Holdings’ investment strategy emphasizes diversification across various sectors, primarily through blue chip securities, which helps manage market risk. The Company adopts a conservative approach, focusing mainly on listed scrips. Liquidity is maintained through consistent dividend income and holdings in short term listed securities.

The Company does not have a formal investment committee; however, management meetings are held on an as needed basis to make investment decisions.

The Company’s investment portfolio consists of 1) Strategic Investments, representing ~39% of the total investment value, and 2) Trading Investments, accounting for ~61% of the total. The trading portfolio is spread across sectors such as fertilizer, commercial banking, cement, oil and gas exploration, pharmaceuticals, tobacco, and food and personal care. However, exposure is concentrated in fertilizer (~49% of the trading portfolio) and commercial banks (~39%), which together account for ~88% of the trading portfolio.

The Company’s portfolio reflects an investment strategy combining long term strategic holdings in subsidiaries and associates with a trading book. As of 9MFY26, its listed associate, FCML, constitutes a significant portion of the portfolio, amounting to ~PKR 11.89 billion out of the total investment value of ~PKR 31.58 billion (FY25: ~PKR 11.42 billion out of ~PKR 26.48 billion). The trading portfolio increased to ~PKR 19.2 billion from ~PKR 14.6 billion in FY25, primarily on net additions of ~PKR 2.17 billion and unrealized gains of ~PKR 2.29 billion. It is anchored by substantial exposures to fundamentally strong blue-chip companies, with the largest position in Fatima Fertilizer Company Limited (~PKR 8.67 billion), followed by United Bank Limited (~PKR 1.94 billion), Meezan Bank Limited (~PKR 1.74 billion) and Bank Al Habib Limited (~PKR 1.18 billion). Marketable investments constituted ~90.8% of total investments at market value (FY25: ~87.8%). Overall, the portfolio balances strategic stability and liquidity, supporting income generation along with potential for capital appreciation, while the concentration in a single large position and two sectors remains a consideration.

In 9MFY26, the Company’s total investment income stood at ~PKR 3.2 billion compared to ~PKR 4.6 billion in 9MFY25. Dividend income amounted to ~PKR 714 million (9MFY25: ~PKR 594 million), while capital gains contributed ~PKR 2.4 billion (9MFY25: ~PKR 3.9 billion), with the moderation mainly reflecting lower unrealized gains on remeasurement of the trading portfolio. Net profit for the period was ~PKR 3.4 billion (9MFY25: ~PKR 4.2 billion), supported by a net taxation credit of ~PKR 0.4 billion.

In 9MFY26, the Company’s coverage ratio (TCF to finance cost) improved marginally to ~2.7x from ~2.5x in FY25, supported by a lower average borrowing cost (~7.1% from ~12.4%) despite higher borrowings. The total investment income to funding cost ratio moderated to ~12.5x from ~18.6x in FY25, as capital gains were lower than those recorded in FY25, but remains at a comfortable level. However, the liquidity assessment relative to funding cost remained weak, given limited cash balances (~PKR 43 million) and higher utilization of short-term borrowings, although the listed portfolio provides a considerable liquidity buffer. In addition, a steady dividend stream supports liquidity, providing shareholders with regular returns while sustaining overall financial stability.

The Company maintains a conservatively structured capital base, with a strong reliance on equity complemented by short term bank borrowings to support its investment activities. As of 9MFY26, total debt increased to ~PKR 5.7 billion from ~PKR 4.1 billion in FY25, comprising short term borrowings of ~PKR 3.0 billion (FY25: ~PKR 1.4 billion) and long-term financing of ~PKR 2.7 billion (unchanged), reflecting greater utilization of short-term financing. At the same time, the equity base expanded to ~PKR 28.5 billion from ~PKR 24.8 billion, supported by profit retention of ~PKR 3.4 billion during the period and fair value gains, reinforcing the Company’s financial strength. As a result, the leverage ratio rose to ~16.6% from ~14.2% in FY25; however, it remains at a comfortable level, supported by a sizable equity cushion that provides resilience against potential financial risks and preserves balance sheet flexibility.

The Company derives its financial strength from the Fazal Group and its associated entities. Its strategic investment in FCML remains the flagship holding, benefiting from an integrated operational structure spanning from spinning to composite production. During 9MFY26, FCML reported revenue of ~PKR 71.6 billion and profit after tax of ~PKR 356 million (FY25: ~PKR 90.0 billion and ~PKR 117 million), contributing a share of profit of ~PKR 87 million to the Company. At the group level, Fazal Group maintains a strong and well-established presence in Pakistan’s textile industry, further reinforcing the Company’s overall stability and support framework.