PACRA Assigns Positive Outlook to Latif Textile Mills (Pvt.) Ltd

The assigned ratings of Latif Textile Mills (Pvt.) Limited (“LTML” or “the Company”) reflect its longstanding operating footprint in Pakistan’s textile sector and a deliberate strategic shift toward value-added terry towel exports. The Company operates an integrated manufacturing setup comprising 7,104 spindles, 5,560 rotors, 128 terry looms, and 102 stitching machines, with annual installed capacities of 10.5 million kilograms of yarn and 4.2 million kilograms of terry products. Over recent years, LTML has consciously scaled down exposure to lower-margin spinning operations and repositioned itself toward the export-oriented terry segment, primarily serving clients in North America and Europe, while domestic sales largely comprise yarn. This transition, supported by disciplined production planning, has enabled the Company to maintain operational continuity despite subdued domestic demand and elevated cost pressures across the textile value chain. Profitability, however, remains sensitive to energy costs, which continue to be a key risk factor for the industry. In response, management has undertaken structural measures to mitigate this exposure through the installation of a 2.0MW solar capacity against the total energy requirements of approximately 5.6MW. This initiative reduced reliance on grid and captive generation. The recent easing in the policy rate provides relief to financing costs.

From a financial risk perspective, the Company’s capital structure remains manageable, with improvement in debt structure through strengthening of the equity base and rationalization of long-term obligations. During the year, short-term financing increased to support elevated working capital requirements, while equity recovered following the loss incurred in the previous year. Liquidity is assessed as adequate, supported by established banking relationships and access to working capital lines. Governance and decision-making remain sponsor-driven, with active owner involvement providing strategic continuity and execution strength, while changes in shareholding during the year reflected intra-family realignment without any impact on control, management structure, or strategic direction.

LTML’s increasing focus on export-led growth within the value-added segment, alongside ongoing energy cost optimization initiatives, is viewed as supportive of enhancing the Company’s business resilience. The positive outlook draws comfort from the Company’s improved business momentum. Liquidity indicators have also improved, reflected in a higher current ratio and more efficient working capital management, driven by enhanced supply chain practices. On the revenue front, the Company has recorded growth in both topline and margins, underscoring prudent resource allocation and improved operating efficiency. These developments are further evidenced by the strengthened debt coverage metrics and improved markup payable days.
The assigned ratings and positive outlook are sensitive to LTML’s ability to sustain improved operating performance and generate stable, recurring cash flows, supported by margin normalization, a higher contribution from the value-added terry segment, and energy cost optimization.

About the Entity
Latif Textile Mills (Pvt.) Limited (“LTML” or “the Company”) was incorporated in 1985 as a private limited company. The Company’s ownership solely lies with the sponsoring family, the families of three brothers namely Mr. Younus Haji Latif, Mr. Junaid Haji Latif, and Mr. Amanullah Haji Latif (Late). Mr. Junaid Haji Latif hold highest shareholding of 21.77%. The CEO, Mr. Jawwad Junaid, belongs to the sponsoring family’s overseas company operations and is assisted by an experienced management team.