PACRA Maintains Entity Ratings of Glamour Textile Mills Limited

Pakistan's spinning sector witnessed a modest recovery during FY26, with cotton yarn production increasing by ~1.0%, following the recovery recorded in the preceding year. However, the sector continues to face structural profitability pressures, primarily arising from elevated energy costs, expensive raw material procurement and limited pricing power. Domestic cotton production remained subdued at 7.05mln bales, significantly below the official target of 10.2mln bales, sustaining the industry's exposure to imported cotton. Meanwhile, regulatory amendments, particularly the exclusion of cotton and yarn imports from the Export Facilitation Scheme (EFS), contributed to a reduction in import dependence. Cotton yarn exports increased by 12.4% during FY26, providing some support to demand. Nevertheless, the sector's recovery remains contingent upon improved domestic cotton availability, rationalization of energy costs, sustained yarn offtake and restoration of competitive operating margins.

Glamour Textile Mills Limited ('Glamour' or 'the Company') is anchored by the established acumen of its sponsors in the leather garments and spinning segment. Operating primarily in the local market, the Company maintains an adequate operational scale with 42,384 spindles, a small fraction of the industry's total 13.4mln spindles, manufacturing carded yarn (cotton and viscose blends) across coarse to super fine counts. The Company’s total spinning production capacity for both cotton and blended yarns stands at 22.5tons per day. The Company's FY26 net sales declined by ~28% to PKR 3,259mln (FY25: PKR 4,551mln), primarily attributable to lower average selling prices. Notably, the decline was price-driven rather than volume-led, with sales volumes remaining resilient, as per management's representation. Gross margin eased to 4.0% (FY25: 4.6%), and fuel and power contribution margin rose to 23% of sales (FY25: 20%). Lower finance cost limited the pre-tax profit decline to PKR 24mln, but a PKR 57mln tax charge resulted in a net bottom line loss. On the financial risk front, the capital structure is supported by retained earnings and revaluation gains, with equity at PKR 1,828mln. Total debt, including related-party loans, declined, reducing leverage to 37% (FY25: 41%). Borrowings are adequately aligned with working capital requirements, and sponsors provide cash to cover bank margins, as per management's representation. However, gross working capital days rose to 100 days (FY25: 73 days) on seasonal inventory build-up, and limited operational cash flows kept coverages thin, with free cash flows from operations covering finance cost and current maturities by only 0.3x.
Focused efforts to curtail energy-related costs are vital, and an improved governance framework and stringent internal controls are essential for the Company's long-term benefit. Accordingly, the Company continues to undertake initiatives to rationalize input costs, including the installation of a 2.7MW solar plant during the period. Furthermore, the Company maintains a 2.6MW of captive power generation capacity through gas generators along with sanctioned grid capacity. Going forward, cost savings from energy-related initiatives are vital, and integrating best practices through an improved governance framework and stringent internal control mechanisms is essential for the Company's long-term benefit.
The ratings hinge critically on the Company's ability to sustain robust operations and capacity utilization, and to restore sales volumes and margins, despite prevailing market conditions. Strict adherence to the debt matrix is imperative, along with keeping cash flows and coverage at an adequate level.

About the Entity
Glamour Textile Mills Limited ('Glamour' or 'the Company') was incorporated under the repealed Companies Ordinance 1984 (now the Companies Act, 2017) on Sept-91 as a listed concern. The Company was delisted in May-18. Ownership of the Company resides among Elahi family. Mr. Asad Elahi and Mr. Azhar Elahi, directly and through their families, holds an equal stake of ~29% in the Company. While, Mr. Ather Javed Elahi and family holds ~28% stake. The remaining stake resides with Mr. Mansoor Elahi and his family. The Board is family dominated, chaired by Mr. Asad Elahi. While, the Company is managed by Mr. Azhar Elahi as the CEO. They are assissted by an experienced management.