PACRA Maintains Entity Ratings of Khas Textile Mills (Pvt.) Limited

The domestic textile sector continued to post modest growth, with Pakistan’s textile exports marginally rising 0.26% YoY to USD 17.93bln during FY26. Growth was primarily supported by value-added readymade garments alongside cotton yarn products. However, the sector remains exposed to elevated energy, freight, insurance, and financing costs, while geopolitical tensions continue to add volatility to global supply chains. Sustaining competitive energy tariffs and policy consistency remains important for maintaining the sector’s export competitiveness.
The assigned ratings of Khas Textile Mills (Pvt.) Limited (“Khas Textile” or “the Company”) find comfort from the established presence of Khas Textile in the yarn spinning market. The Company operates a purpose-built manufacturing facility in Nooriabad, Karachi, with an installed capacity of 19,200 spindles and 864 rotors. The Company maintains strong affiliations with Khas Energy, Khas Socks & Knitwear, Khas Trading, and Kruddson, with common ownership and management providing operational linkages across the broader business group. Khas Textile is primarily involved in the manufacture and sale of coarser yarn to local weavers with a marginal presence in the internation market.
During 9MFY26, the Company’s revenue stood at PKR 3.0bln and as per management’s representation PKR 3.7bln during the FY26, reflecting a decline of approximately 5.1% from PKR 3.9bln in FY25, primarily reflecting muted demand during the last quarter. Despite the decline in topline, profitability improved, with elevated profit margins during 9MFY26, supported by prudent cost management decisions. The Company’s total borrowings increased moderately to PKR 2.7bln as of Mar’26 from PKR 2.6bln in Jun’25, representing an increase of around 2.8%. Meanwhile, working capital remains a key consideration, with elevated trade receivable days, indicating elevated funds tied up in receivables and impacting the overall working capital cycle. The financial risk profile of the Company remains adequate for the spinning industry, with a leverage reduction plan in place by the Company during FY27.
Going forward, the Company is exploring alternative renewable energy sources and is at an advanced stage of implementation. The initiative is expected to significantly reduce energy costs, improve cost efficiency, and support more stable and wider margins. In parallel, the Company is pursuing new markets to diversify its customer base and tap into an international customer base. The shift towards exports is expected to provide greater market diversification and support the Company’s revenue growth over the medium term. Overall, the Company’s financial profile remains supported by improved profitability, established operations, and strong group affiliations. The planned energy transition and export expansion are expected to further strengthen operational efficiency and support business growth.
The ratings are dependent upon the management’s ability to improve margins, profitability, and the Company's financial profile. This includes keeping the debt levels manageable and improving the Company's business profile. Improvement in the governance framework remains important for the ratings.

About the Entity
Khas Textile Mills (Pvt.) Limited (“Khas Textile” or “the Company”) was incorporated in 2001 and is wholly owned by the sponsoring family, with Mr. Khurram Ashfaq and Mr. Noman Ashfaq each holding approximately 33% of the Company’s shares. The remaining shareholding of approximately 34% is equally held by Mrs. Saira Noman and Mr. Muhammad Muneeb Ashfaq, with each holding around 17%. Mr. Ashfaq Ahmed serves as the Chairman of the Board, while Mr. Khurram Ashfaq is the Managing Director. The Company is supported by an experienced management team, with the sponsoring family maintaining active involvement in the business.