Press Release
VIS Reaffirms Entity Ratings of Gadoon Textile Mills Limited
Karachi, December 16, 2025: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Gadoon Textile Mills Limited at ‘A+/A1’ (Single A Plus/A One). The medium to long term rating of ‘A+’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of ‘A1’ denotes strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 9, 2024.
Gadoon Textile Mills Limited (‘GADT’ or ‘the Company’), established in 1988, is engaged in the production and sale of yarn, knitted bedding products, and milk. GADT is part of Yunus Brothers Group (YBG), a well-established conglomerate in Pakistan. The sponsor profile has also been incorporated in the ratings. The Company generates recurring dividend income, from long-term investments in associated companies, complimenting profitability profile. Installed capacity and actual production has increased on a timeline basis while the Company has maintained utilization levels above 95%. The Company also demonstrates a strong record in meeting ESG standards, with ongoing investments in renewable energy, water conservation, and environmental compliance.
Despite challenges in the spinning segment, GADT has expanded capacity and achieved higher production levels, supported by steady export demand for knitted bedding products. In FY25, net sales declined slightly, primarily mainly due to weaker domestic sales, though exports continued to grow. Gross margins improved through efficient procurement, disciplined cost control and extensive investments in energy savings. This margin improvement, combined with stable non-operating income and lower financial charges, contributed to a significant increase in net profit during FY25. Also, debt coverage ratios strengthened, although liquidity and capital structure remain under pressure due to increased reliance on short term borrowings to meet rising capital requirements.
Looking ahead, management anticipates healthy topline growth driven by diversification in the knitted bedding segment and continued focus on cost management. Reaffirmation reflects the Company’s strong sponsor profile, improved profitability, and enhanced debt coverage, while recognizing the continuing pressure on liquidity and capital structure. Sustained improvement in sales, margins, and financial metrics will remain important for ratings stability.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf