Lahore: The Board of Directors of Hamid Textile Mills Limited has reported a challenging year for the company, with a notable decline in revenue and profitability. According to the Directors' Report to the Members, presented as part of the 39th Annual Report for the fiscal year ending June 30, 2026, the company faced significant pressures from high energy tariffs, elevated financing costs, and increased competition from imported yarn.
The company's revenue for the year amounted to Rs. 910.090 million, down from Rs. 960.746 million in the previous year, marking a decline of 5.27%. Gross profit also fell to Rs. 26.388 million from Rs. 33.158 million, a decrease of 20.42%, with the gross margin narrowing to 2.90% from 3.45%. This decline was attributed primarily to escalating energy and conversion costs, although efforts to improve procurement efficiency and product mix provided some relief.
Despite these challenges, the company managed to generate positive net cash flows from operating activities, amounting to Rs. 18.852 million, and avoided a cash loss for the year. This operational resilience was achieved in the face of an adverse economic environment characterized by regional conflicts and volatility in energy prices, as well as increased financing costs due to the absence of renewed banking facilities.
Finance costs increased by 20.23% to Rs. 7.509 million, reflecting the cost of secured borrowings to support working capital needs. As a result, the company's loss before levy and taxation widened to Rs. 29.272 million from Rs. 18.016 million in the prior year. Despite the loss, the company maintained a positive net asset position, with total assets exceeding total liabilities by Rs. 379.107 million as of June 30, 2026.
The Directors acknowledged the continued macroeconomic stabilization efforts within Pakistan under the IMF-supported reform program, which provided relative stability in exchange rates and improved foreign exchange reserves. However, geopolitical tensions and fluctuations in raw material prices, energy costs, and logistics expenses continued to impact the textile sector, affecting margins across the value chain.
According to information available from the Pakistan Stock Exchange (PSX), the company's performance is reflective of broader trends in the textile industry, which remains affected by subdued international demand and competitive pressures in export markets.
Looking ahead, the company anticipates ongoing challenges in the operating environment, including factors such as global demand, energy prices, exchange rate movements, interest rates, and raw material costs. The Directors remain focused on operational efficiency, cost optimization, and sustainable business practices to strengthen the company's competitive position.
The statutory auditors have expressed concerns over the company's financial statements, citing material uncertainties related to its going concern status. Despite a long-standing dispute over banking facilities pending adjudication before the Lahore High Court, the Directors maintain that the use of the going concern basis for financial statement preparation remains appropriate.
In conclusion, while the company faces significant challenges, efforts are underway to enhance renewable energy capacity and resolve outstanding disputes, with the aim of restoring access to formal banking facilities and supporting capacity enhancement. The Directors remain optimistic about the company's potential to navigate the current economic landscape and achieve sustainable growth.