PACRA Revised Ratings of Masood Fabrics Limited

Masood Fabrics Limited (“the Company” or “MFL”) experienced a weakening in its credit profile as per information shared by the management. The revision in ratings reflects a combination of heightened uncertainty surrounding the Company’s current risk position, alongside emerging pressures observed across its operating environment. The inability to obtain adequate and timely information, despite sustained engagement efforts, has constrained visibility into the Company’s latest financial and operational standing, thereby limiting the rating assessment framework. In such circumstances and accompanied by a significant decline in cash generation capacity, the continuation of the previously assigned ratings is deemed less tenable.
The textile sector continues to operate under a challenging backdrop, characterized by demand-side pressures, elevated input costs, and liquidity constraints across the value chain. While the impact varies across industry participants, entities with constrained financial flexibility and limited access to funding avenues remain relatively more exposed. In this context, concerns are accentuated for the Company, particularly given indications of stress within associated group entities, where elevated utilization of available credit lines has been observed, potentially constraining financial maneuverability at the group level.
The Company’s available financial information, primarily comprising management accounts for the period ended FY25, reflected a weakening trajectory in key performance indicators. The topline contracted, while margins remained under pressure, translating into a subdued profitability profile. Despite some moderation in finance costs, coverage indicators remained stretched, and the capital structure continued to reflect a leveraged position. Furthermore, earlier financial projections have not consistently translated into realized performance in prior periods, indicating executional challenges under prevailing conditions.
Moreover, the broader global environment remains risky. Persistently high energy costs, imposition of US tariffs, coupled with evolving dynamics in regional energy markets, continue to pose challenges to cost structures within the textile sector. These factors, when viewed alongside tightening liquidity conditions in the financial system, influence the Company’s access to external funding and overall financial flexibility. While funding relationships remain, a degree of caution appears to be emerging within the financial ecosystem, which has implications for entities operating with already elevated leverage and working capital intensity.
The governance framework of the Company is understood to be driven by the sponsoring group; however, the frequent transitions in the group-level management have been witnessed as well.
Going forward, the provision of comprehensive and timely financial information, including audited financial statements and updates on liquidity and funding arrangements, will be critical in enabling a more accurate assessment of its credit profile.

About the Entity
Masood Fabrics Limited ("Masood Fabrics" or "the Company") is a public unlisted company incorporated in May, 1998. The Company operates with the production facility of 32,880 spindles and 260 looms. Mr. Khawaja Jalaluddin Roomi (late), the Company’s CEO oversaw the Company’s operations. His son, Khawaja Najamuddin Roomi is involved in the Company's operations as the Executive Director.