Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity rating of Ellcot Spinning Mills Limited (ESML), reflecting the company's stable financial risk profile despite challenges in the domestic spinning sector. ESML, part of the Nagina Group, benefits from the Group’s diversified textile operations and intra-group linkages that contribute to revenue stability.

According to PACRA, ESML manufactures pure-cotton and polyester-cotton yarn, operating with a unit of 79,200 spindles and maintaining healthy capacity utilization. The company has enhanced its energy strategy by increasing its solar capacity to 6.5MW, representing 31% of its total 21MW generation capacity, and shifting towards more electric and solar sources to improve energy efficiency amid rising energy costs.

The domestic spinning sector is experiencing pressures from elevated energy and input costs, taxation issues, and international competition. However, ESML has shown resilience, with its topline for the first nine months of FY26 standing broadly flat at PKR 11,986 million, anchored by local sales. ESML’s profitability saw an increase, with gross margins edging up to 6.4% and net margins to 0.6%. The company also strengthened its coverage and leverage metrics, with a majority of working capital funded through receivables, although liquidity remains slightly tighter due to a lengthened cycle.

ESML's governance structure includes a 10-member Board with diverse representation and a stable management team led by an experienced CEO. The ratings by PACRA are supported by ESML's improving financial profiles against a challenging topline environment, with future considerations focusing on operational efficiencies, investment translations into cost savings, and maintaining working-capital discipline.