Nishat expands denim capacity and pins hopes on exports
Nishat Mills Limited (NML), a textile mill in Faisalabad, Pakistan, incurred a capital expenditure of 12 billion rupees (£34.5 million) for its denim plant, which includes investments in the machinery and buildings, during the 2024/25 fiscal year.
The group also spent 3 billion rupees on a workwear plant, bringing the total capital expenditure to 15 billion Pakistani rupees (around £43 million).
Myesha Sohail, a research analyst at Topline Securities, indicated that production in the new plants has commenced and that this quarter’s results reflect these investments. She noted that this will significantly enhance the company’s value-added portfolio.
In a separate analysis, Usama Rauf from AKD Securities clarified that this is not a new investment but related to the total capital expenditure for production lines that began operating in the first half of the fiscal year.
NML organised a corporate briefing session on November 27, during which management discussed the company’s financial performance and outlook. The manufacturer has expanded its presence by setting up a wholly owned subsidiary in Turkey and opening an office in Bangladesh to strengthen its export capabilities.
In September, the board approved plans to form a private limited company in the UK through its wholly owned subsidiary, Nishat International FZE, pending the necessary regulatory approval.
NML’s sales distribution is as follows: 25% from Europe, 22% from direct exports, 20% from Asia, Africa and Australia, 19% from Pakistan and 14% from America.
Looking ahead, NML said challenges include soft demand in Europe and America, high input costs (fuel being the largest concern), elevated financing costs and taxation. The company’s strategy emphasises increasing exports and boosting sales of value-added products such as denim and workwear to enhance profit margins.
NML reported an unconsolidated profit of 6.4 billion rupees for fiscal year 2024, marking a 47% decline year-over-year. This drop was primarily due to decreased gross profit margins resulting from falling global demand (impacting about 6.5 billion PKR) and higher finance costs (approximately 3.5 billion PKR). However, in the first quarter of 2024-25 (July – September), the company’s net profit rose by 80% to 944 million rupees.
