PACRA Maintains Entity Ratings of Roomi Fabrics Limited

The rating of Roomi Fabric Limited’s (‘the Company’ or ‘RFL’) reflects the adequate profile of the Company within the textile sector of Pakistan. The Company is principally engaged in the manufacture and sale of yarn, grey fabric, home textiles, and terry towels. RFL is the flagship of the Masood Roomi Group, which comprises six entities operating under its umbrella: Roomi Fabrics Limited, Masood Fabrics Limited, Masood Apparels (Pvt.) Limited, Roomi Home (Pvt.) Limited, Masood Holdings (Pvt.) Limited, and Roomi Holdings (Pvt.) Limited. The governance framework features the active involvement of the sponsoring family, whose hands-on role and sector-specific expertise significantly contribute to the Company’s operational direction. The Company continues to rely mainly on imported raw cotton from the USA, Brazil, and Tanzania, to attain the desired product quality and meet customer requirements in the cloth, terry, and home textile segments. Nevertheless, the stability of a solid customer base bolsters the Company’s revenue stability and business continuity outlook. During 6MFY25, the Company generated a topline of PKR 14.4bln (FY24: PKR 25.3bln), primarily driven by export sales to countries across Asia, Europe, the USA, and Africa. In terms of business contribution and profitability generation, the cloth segment occupies a leading position in the Company’s valuation matrix, followed by spinning, home textile and terry. During the period under review, the Company’s profitability profile was impacted, primarily due to modest product pricing dynamics, relative stability in the USD conversion rate, elevated energy tariffs, and significant finance costs and tax burden. These factors have collectively impacted the trajectory of margins. Non-operating income derived from long-term equity investments in blue-chip entities and strategic investments in group companies has provided some cushion in the profitability matrix of the Company. The Company undertook capital expenditures (CAPEX) of PKR 7.0-8.0bln in prior years, resulting in the establishment of a production facility aimed at enhancing terry towel manufacturing capacity. This expansion is anticipated to support topline growth in subsequent periods. The Company is also expected to increase its solar energy capacity as a strategic initiative to mitigate the risks associated with rising energy costs. Currently, in response to a recent dip in industry electricity tariff, the Company shift its energy mix towards electricity. The Company’s financial risk profile is deemed adequate in light of its leveraged capital structure and stretched working capital cycle. While current cash flow generation and debt coverage indicators are assessed as adequate, there remains room for improvement. The textile industry is grappling with several key challenges, including evolving global demand and consumption trends, alongside increasing pressures on price competitiveness. These pressures arise from a revision in the minimum wage, elevated energy tariffs—which, despite a reduction, remain high in a regional comparison—reliance on imported cotton owing to an 18% GST on local procurement, and the impending imposition of a 29.0% reciprocal tariff on exports to the United States, currently deferred for 90 days. The Company maintains a minimal exposure of approximately 3% in the US market.
The ratings are dependent upon the Company’s ability to prudent working capital management. Improvement in coverages, sustainability of margin, and sufficient generation of cash flows from core operations while expanding business volumes remains vital. Adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings

About the Entity
Roomi Fabrics Limited is a venture of Masood -Roomi Group, which was established in 2021; previously, it was part of the Mahmood Group till 2021. Overall control vests with five board members, three of whom are from the sponsoring family. Mr. Khawaja Jalaluddin Roomi is the Chairman of the Company and has more than 30 years of experience in the textile industry. He is supported by a team of seasoned professionals who work under various sub-divisions to ensure efficiency.