Press Release
VIS Reaffirms Entity Ratings of Naveena Industries Limited
Karachi, May 18, 2026: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Naveena Industries Limited (‘NIL’ or ‘the Company’) 'A-/A2' (‘Single A Minus/ A Two’). Medium to long term rating of 'A-' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains 'Stable’. Previous rating action was announced on March 10, 2025.
Naveena Industries Limited (‘NIL’ or ‘the Company’) was incorporated in 1966 as a private limited company and was subsequently converted into a public unlisted company in 2011. The Company is engaged in the manufacture and export of fabric and home textile products. The Home Textile Division primarily produces bedding products for export markets, including the United States and the United Kingdom. The manufacturing facilities are located at Rahim Yar Khan and Karachi, with the registered office in Karachi.
Pakistan’s textile spinning sector has undergone significant structural contraction, with over 100 units ceasing operations over the past five years, reflecting persistent competitive and cost pressures. Policy changes, including the shift from the Final Tax Regime to the Normal Tax Regime, have altered liquidity dynamics, with exporters facing delays in sales tax refunds, thereby increasing reliance on working capital financing and associated costs. Additionally, elevated energy tariffs—despite recent moderation—remain higher than regional benchmarks, impacting cost competitiveness. While vertically integrated and energy-efficient players have demonstrated relatively better resilience, the overall sector continues to face profitability and operational challenges. In contrast, the weaving segment exhibits relative stability, supported by consistent export demand, although efficiency disparities persist due to prevalence of conventional looms.
The assigned ratings reflect NIL’s established presence in the textile value chain, supported by stable operations and improved capacity utilization during FY25 driven by higher local demand for greige fabric. Despite operational stability, profitability remained constrained due to margin compression from lower selling prices and elevated energy costs.
The ratings also reflect the Company’s capital structure, which came under pressure during FY25 owing to increased reliance on short-term borrowings to meet working capital requirements, leading to higher gearing and leverage. Scheduled loan repayments in 1HFY26 contributed to a modest improvement in capital structure indicators. Liquidity and debt coverage indicators remained adequate, though debt coverage weakened due to lower internal cash generation and higher tax outflows, partially offset by proceeds from non-core investments.
The ratings are supported by adequate liquidity, concessional long-term borrowings under LTFF scheme and its strategic shift towards higher value-added garments. Going forward, the ratings remain sensitive to improvements in margins, disciplined working capital management and stable internal cash generation to strengthen financial flexibility.
For further information on this ratings announcement, please contact 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf