Al Rahim Textile Industries Limited (Al Rahim or 'the Company') has its origins in Al Rahim Textile Industries, established in 1991 as a sole proprietorship. To enhance its corporate structure and facilitate growth, the business was restructured into a public unlisted company, Al Rahim Textile Industries Limited, in July 2019. As part of this transition, all assets and liabilities of the sole proprietorship were transferred to the newly formed entity. The Company’s registered office is located in Karachi, with its state-of-the-art manufacturing facility situated in Nooriabad, Sindh.

The Company was founded by Mr. Abdul Rahim Saya and initially focused on providing processing and weaving services. In 2005, Al Rahim established its manufacturing facility in Nooriabad, which has since played a pivotal role in its growth. Following a significant expansion in 2015, the Company has emerged as one of the leading manufacturers of towels in Pakistan, cementing its position in the textile industry.

Al Rahim specializes in the manufacturing of towels and fabrics, with a strong focus on exports. The Company caters to a diverse clientele, including retailers and the hospitality sector, such as hospitals and hotels. Al Rahim operates with an impressive production capacity, comprising 284 air-jet looms, 447 stitching machines, 3 printing machines, 7 embroidery machines, and 44 dyeing machines. Following the incorporation of the new entity in FY20, all assets and liabilities were seamlessly transferred to the newly established company, ensuring continuity and operational efficiency.

Al Rahim is a family-owned business, with ownership held by the Saya family. Mr. Faisal Rahim Saya is the majority stakeholder, while the remaining shares are equally distributed between Mr. Moiz Saya, son of Mr. Faisal Rahim Saya, and Mr. Abdul Rahim Saya.

Both sons of Mr. Abdul Rahim Saya, Mr. Faisal Rahim Saya and Mr. Shehzad Saya, actively contribute to the Company’s operations. However, the majority of the shareholding is held by Mr. Faisal Rahim Saya. A formal succession plan is in place, under which the business will transition to Mr. Moiz Saya, the Director and son of Mr. Faisal Rahim Saya, who currently serves as the Company’s CEO.

The Saya family has been deeply rooted in the textile industry for over three decades. Their remarkable growth and success over the years are a testament to their exceptional business acumen and strategic vision.

The Saya family possesses substantial wealth, underscoring the financial strength and stability of the sponsors. Their commitment to the Company is evident through past equity injections that have supported its growth and operations. In addition to Al Rahim Textile Industries, the family also owns Al Rahim Retail Limited, which operates Zellbury Brand Stores, as well as ventures in real estate and construction within Pakistan.

The board of directors consists of three members and is chaired by Mr. Abdul Rahim Saya. It includes two executive members, one of whom is the CEO, and one non-executive director, all representing the Saya family. While the current structure reflects strong family leadership, there is an opportunity to enhance governance by expanding the board to include additional members, particularly independent directors, to bring diverse perspectives and expertise.

The Saya family has been actively engaged in the textile industry since 1991, bringing decades of expertise to the sector. The board members possess deep knowledge and exceptional acumen in textile manufacturing and the towel industry, which is evident in the Company’s sustained growth and success.

The board members play an active role in overseeing the Company’s operations. Board meetings are convened on an as-needed basis, ensuring timely decision-making. However, the board has yet to establish formal committees, and there is no structured policy in place for recording board meeting minutes. Implementing these governance practices could enhance the board's effectiveness and transparency.

Reanda Haroon Zakaria & Company, Chartered Accountants, serves as the external auditors for the Company. The firm issued an unqualified opinion on the financial statements for the year ending June 30, 2023, reflecting the Company’s adherence to accounting and financial reporting standards. Reanda Haroon Zakaria & Company is QCR-rated by ICAP and classified under Category 'B' on the State Bank of Pakistan’s panel of auditors. The audit for the financial year ending June 30, 2024, is currently in progress.

The Company's management structure is organized into well-defined divisions and functional departments, ensuring clear lines of responsibility and accountability. The head office and site management operations are overseen by Mr. Faisal Rahim Saya, the CEO, providing strong leadership and strategic direction.

Mr. Faisal Rahim Saya, the CEO, leads the Company’s management team with over 28 years of experience in the family business. His strategic leadership has been instrumental in driving the Company’s success. He is supported by a skilled and professional team, ensuring effective management and operational excellence.

The Company does not currently have formal management committees. However, senior management holds daily meetings to address ongoing issues and strategize for future plans, ensuring effective communication and swift decision-making.

During the year, the Company implemented G-Tech software, providing reliable business solutions and revolutionizing information management. The introduction of live dashboards has enabled real-time reporting for management, eliminating the need for manual reporting by staff and enhancing operational efficiency.

The sponsors of the Company are actively involved in both the Board and management, ensuring cohesive leadership and strategic alignment. Al Rahim has established an internal audit department, which serves as a vital component of its management control system. Additionally, the Company upholds stringent quality control procedures, reinforcing its commitment to excellence. Al Rahim holds a range of prestigious certifications, including Oeko-Tex 100 Class-I and Class-II, BSCI, C-TPAT, Sedex, GOTS, and BRC, which underscore its robust control environment and adherence to international standards.

Pakistan's towel manufacturing sector, comprising approximately 10,000 shuttle and shuttle-less looms across organized and unorganized segments, remains predominantly export-oriented. In FY24, towel exports grew by 5.55%, reaching USD 1.06bln compared to USD 1bln in FY23, despite global economic challenges. The sector continues to contribute around 6% to Pakistan's overall textile exports, maintaining its reputation for exceptional product quality. As one of the top five global towel exporters alongside China, India, Turkey, and Vietnam, Pakistan remains a key player, collectively accounting for 80% of the global export market. This resilience underscores the sector's importance in driving economic growth and sustaining its competitive edge internationally.

Al Rahim is a prominent player in Pakistan's towel industry, holding an impressive ~10% share of the country's total towel exports. In comparison, Feroze 1888 stands as the market leader, commanding a significant ~20% share. Together, these companies play a vital role in shaping Pakistan's position as a key towel exporter globally.

The Company primarily generates revenue from the manufacturing and sale of towels. In FY24, the topline reached ~PKR 29,924mln, with ~PKR 24,541mln derived from exports and ~PKR 6,363mln from the local market. This marks a robust year-on-year (YoY) growth of ~15.4% compared to ~PKR 25,935mln in FY22. The significant growth in revenue highlights the Company’s strong export orientation, with exports contributing approximately 82% to the total revenue. The increase reflects the Company's ability to capitalize on global demand while maintaining a solid presence in the local market. This balanced growth demonstrates the Company’s resilience and effective market strategies in a competitive industry.

During FY24, the Company’s gross margin declined to ~16.1% (FY23: ~21.3%) and operating margin decreased to ~10.1% in FY24(FY23: ~13.1%), reflecting higher input costs and operational expenses that impacted profitability. Despite these declines, the net profit margin improved to ~7.6% (FY23: ~7.1%), driven by effective financial management and potential gains from non-operational income. This improvement in net profit margin indicates the Company’s ability to offset challenges in gross and operating margins, though focus on cost optimization and operational efficiencies will be crucial to maintaining sustainable profitability moving forward.

As an export-oriented entity, the Company has experienced a positive growth trend, particularly from key export destinations such as the USA and Europe. This reflects a strong international demand for its products, driven by the Company's reputation for quality and reliability. Looking ahead, the Company is well-positioned to capitalize on increasing global demand, with expectations of continued growth in both export sales and market expansion. As key international markets recover and consumer spending rises, the Company’s focus on maintaining product quality and expanding its global footprint is likely to drive sustained growth in the coming years. Enhanced marketing efforts, coupled with strategic partnerships, will further support this upward trajectory in demand.

During FY24, the Company’s gross working capital days declined slightly to 175 days (FY23: 187 days), reflecting improved efficiency in managing working capital. Inventory days also decreased to 97 days (FY23: 109 days), indicating better inventory turnover and reduced holding periods. Trade payables improved to 52 days (FY23: 57 days), showing the Company’s ability to manage supplier payments more efficiently. Meanwhile, trade receivable days remained relatively stable at 78 days (FY23: 79 days), indicating consistent collection practices. As a result, net working capital days improved to 124 days in FY24 (FY23: 131 days), highlighting the Company’s strengthened working capital management and its ability to free up resources for reinvestment. Overall, the reduction in working capital days reflects operational improvements, though maintaining efficient receivables and inventory management will be key to sustaining this positive trend.

The Company's free cash flows from operations (FCFO) increased to ~PKR 3,116mln in FY24 (FY23: ~PKR 2,666mln), driven by the overall growth in sales, reflecting strong operational performance and effective cash generation. The interest coverage ratio slightly declined to 5.8x (FY23: 5.9x), indicating a marginal reduction in the Company’s ability to cover interest expenses from its earnings, but it remains at a healthy level, suggesting manageable debt servicing. On the other hand, the debt coverage ratio improved significantly to 4.8x (FY23: 4.1x), indicating enhanced ability to cover total debt obligations with available cash flows. This improvement reflects the Company’s stronger financial position, reduced leverage risk, and effective debt management. Overall, the Company’s ability to generate free cash flows while maintaining solid debt coverage highlights its financial strength and capacity for reinvestment and growth.

The Company maintains a moderately leveraged capital structure, with leverage decreasing to ~29.1% in FY24 (FY23: ~34.8%), indicating a reduction in reliance on debt financing and a more conservative approach to capital management. Short-term borrowings, used to finance working capital requirements, stood at ~PKR 5,059mln in FY24 (FY23: ~PKR 5,689mln), reflecting a decrease in short-term debt, which is aligned with improved working capital management. Long-term borrowings also decreased to ~PKR 250mln in FY24 (FY23: ~PKR 273mln), showing a reduction in long-term financial obligations. This overall decrease in borrowings highlights the Company’s focus on reducing leverage and improving its balance sheet strength, providing greater financial flexibility and lower risk exposure. With a more efficient capital structure, the Company is well-positioned to manage its debt levels while sustaining growth and profitability.