PACRA Maintains Entity Ratings of Ali Embroidery Mills (Private) Limited

The assigned ratings of Ali Embroidery Mills (Private) Limited (“AEML” or “the Company”) reflect its established position within Pakistan’s value-added textile segment, operating in industrial embroidery that supports downstream garment manufacturing. The Company’s business model is characterized by specialized capacity, recurring demand, and close integration with garment manufacturers, despite operating in a fragmented segment. As per the management, AEML operates 142 multi-head embroidery machines and 33 Schiffli machines at high utilization levels, indicating sustained operating traction. During FY25, revenue clocked in at PKR 2.7bln (FY24: PKR 2.2bln), supported by favorable pricing amidst stable volumes.

Profitability outcomes provide a lens into the Company’s operating quality amid a challenging cost environment. The gross profits witnessed an augmentation to PKR 409.2mln (FY24: PKR 342.3mln) and net profit to PKR 100.5mln (FY24: PKR 60.9mln). However, margin performance remained broadly stable during the year, with the gross profit margin marginally easing to 15.3% (FY24: 15.8%), while the net profit margin improved to 3.8% (FY24: 2.8%). Energy optimization initiatives, including the installation of 1.3MW of solar capacity against total requirements of ~1.4MW, have partially shielded the Company from grid-related cost volatility. Revenue remains concentrated, with FY25 sales primarily from related-party manufacturers. While this integration supports order continuity and capacity utilization, the lack of customer diversification highlights a reliance on a limited number of counterparties. This reliance ties growth sustainability to the performance and expansion plans of its associated companies, though pricing is market-competitive and transactions are conducted on an arm’s-length basis.

AEML’s FY25 performance is notable in the broader sector context. Pakistan’s textile sector faces moderated external demand and structurally high costs, yet value-added segments have exhibited relative stability. An easing monetary environment provided incremental relief on financing costs, supporting sector-wide cash flows. From a financial risk perspective, improved internal cash generation reflects a favorable interplay between scale and working capital management. Free Cash Flow from Operations rose to PKR 279mln (FY24: PKR 237mln), supporting liquidity and financial flexibility. While the capital structure remains leveraged, strengthened cash flows and retained profits demonstrate the Company’s capacity to internally support operations. Liquidity remains adequate, supported by established banking lines and working capital facilities. For the current year, operating continuity and liquidity indicators remain broadly in line with FY25.
The ratings depend on the Company’s ability to sustain disciplined operations and stable cash flows, underpinned by full utilization of existing embroidery capacity. Margin resilience will hinge on ongoing cost and energy optimization, along with prudent working capital management.

About the Entity
Ali Embroidery Mills (Pvt.) Limited was incorporated in Pakistan in 1972 as a private limited Company. The Company is associated with the Sefam Group of Industries, and EastGate Industries (Pvt.) Ltd headquartered in Lahore. The Company has a three-member sponsoring family board. The board is chaired by Mr. Hamid Zaman, while the CEO, Mr. Tariq Zaman oversees the Company’s affairs.