Press Release
VIS Reaffirms Entity Rating of Shahbaz Garments (Private) Limited
Karachi, June 18, 2025: VIS Credit Rating Company Limited has reaffirmed entity ratings of ‘A-/A2’ (Single A Minus/A Two) assigned to Shahbaz Garments (Private) Limited. Long Term Rating of ‘A- denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remain ‘Stable’. Previous rating action was announced on April 16, 2024.
Shahbaz Garments (Private) Limited (‘SGL’), incorporated in 1972 is engaged in the manufacturing and sale of safety gloves, yarn and fabric. The Company is part of a group ultimately owned by Pangea Limited, headquartered in Jersey. The group comprises of five Pakistan-based entities: Prime Safety Limited, Beltexco Limited and SGL, which specialize in glove manufacturing, while Midas Clothing Limited and Industrial Clothing Limited focus on industrial and safety apparel production. The group benefits from vertically integrated operations, a diversified product portfolio and a global market presence – factors that contribute to SGL’s operational resilience and strong business profile.
Pakistan’s textile sector faces persistent challenges driven by economic cyclicality, intense competition and structural constraints. The industry remains highly sensitive to demand fluctuations, exposing it to broader economic pressures. In FY24, cotton production rose by 79% due to a low base, but it declined by 59.4% YoY by October 2024. While a rebound to 5.55 million bales is projected for FY25, it remains uncertain amid limited cultivation area, rising energy costs and climate-related risks such as floods and pest infestations. Despite these issues, 3QFY25 textile exports grew, led by value-added segments and reliance on imported cotton. However, profitability remains vulnerable to raw material price volatility, inflation and exchange rate movements. Additional cost pressures stem from a 23% gas price hike from March 2025 and the transition to the Normal Tax Regime, both of which are expected to strain margins further.
The ratings reflect SGL’s well-established brand name ‘Midas Safety’, its international presence and the backing of a strong sponsor. Operating profitability was impacted in CY24 due non-recurring, one-off expenses, which are expected to normalize in CY25, as reflected in 1QCY25 performance. Net profit was affected by high finance costs, however, with the easing of interest rates and improved operating performance, margins and coverage indicators are expected to strengthen. The liquidity profile remains adequate. Going forward, the ratings remain sensitive to the improvement in profitability and the maintenance of capitalization indicators.
For further information on this ratings announcement, please contact 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