PACRA Maintains the Entity Ratings of Reliance Weaving Mills Limited

The assigned rating of Reliance Weaving Mills Limited (“RWML” or “the Company”) reflects its association with the Fatima group as a sponsoring entity. The group is among Pakistan's largest and most progressive business conglomerates operating in diversified sectors including Fertilizers, Textiles, Sugar, Energy, Packaging, Mining & Trading of commodities. RWML is the textile arm of the group and operates as a composite unit comprised of spinning and weaving segments. The Company owns a state-of-the-art production facility with 94,896 spindles and 476 looms respectively. The governance framework is considered strong as the Company adopts the essence of best corporate governance practices with eminent member profiles. During FY25, the weaving segment generates the majority of the business, ~67% of sales value, and the remaining is contributed by spinning, as the total revenue witnessed marginal contraction by ~2.2% in amounting to PKR 40,220mln (FY23: PKR 41,461mln; 1QFY26: PKR 10,736mln), primarily driven by subdued pricing dynamics. During FY25, margins of the Company have been fluctuating. The Company recorded the highest gross margin the June quarter (18%), while the lowest gross margin was witnessed in the 3rd quarter of financial year, amounting to 8%. There was a slight loss before tax in the same quarter which was highly compensated by the superior profitability during the last quarter of financial year, hence the Company was able to post a profit after tax of PKR 257mln which given its size, falls short of commensurate standing. The challenge persist which is evidence in the performance of 1st quarter of FY26. The ratings take comfort from the management’s ability and sponsors overall agility to steer through challenging times. The Company's management remains focused on enhancing profitability through cost transformations to optimize cost competitiveness. For that purpose, the Company has installed 20 MW renewable solar system and a further 3MW is currently under installation. The financial risk profile depicts marginal improvement owing to adequate in credit quality metrics, alongside a squeeze in the buffer for short-term trade leverage, which impacted working capital management. Furthermore, the Company maintained a high leveraged capital structure of 67.2%, reflecting the industry's propensity for increased borrowings.
The ratings depend on the Company’s ability to improve profitability and coverage while prudently managing its working capital requirements. Generating sufficient cash flows from core operations remains critical. Adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings.

About the Entity
RWML, a publicly listed entity, commenced operations in 1990 and is primarily engaged in the manufacturing and sale of yarn and fabric. The Company is majority-owned by the Fatima Group, which holds an 80.8% stake through individual shareholders and associated undertakings. The board consists of eight members, including the CEO: five non-executive directors, one executive director, and two independent directors. It is chaired by Mr. Fawad Ahmed Mukhtar. Six members represent the Fatima Group. Mr. Faisal Ahmad, the CEO of the Company, has extensive experience across multiple industries.