PACRA Maintain Entity Ratings of Be Be Jan Pakistan Limited

Be Be Jan Pakistan Limited (the company) is enjoying the position as one of Pakistan’s icons of the textile industry with huge capacity in vertically integrated manufacturing facilities. The Company covers all textile operations necessary to produce high-quality hospitality, healthcare, and home textile products. The Company is also a manufacturer and exporter of high-quality workwear for companies, organizations, and institutions, with a diverse product line. The Company has sound internal control and IT framework; Room for improvement exists in the governance structure given the absence of independent oversight on the board. The family management control is good. However, the recent global demand slowdown has impacted company’s export volumes and sales which were recorded at PKR 5.75 billion in FY23 (Management Numbers). Rising administrative overheads and high financial charges led to thinner net margins. Improvement in the same is considered important from the ratings perspective. The liquidity profile is underpinned by adequate cash flow coverages in relation to outstanding obligations. With a recent equity injection, the Company continues to maintain a moderately leveraged capital structure. The demand pattern is expected to improve in the upcoming years, thus prompting the Company to start BMR in FY25, which will add 35 looms to the existing capacity and is expected to bring in efficiency gains, lower cost per loom, and improved margins.
During FY23, textile exports were valued at $16.5 billion as against $19.33 billion, reflecting a 15% year-on-year decline. Value-added products such as knitwear, bedwear, towels, and ready-made garments saw an annual decline of 13 percent while basic textiles, including raw cotton, cotton yarn, and cotton fabrics, declined by 21 percent year-on-year in FY23. Volumes declined due to higher energy prices and interest rates, cotton shortages, uncertainty in foreign exchange rates, and a global slump in demand. Taming the demand represented by export routes was also a challenge. During FY23, value-added products such as knitwear, bedwear, towels, and ready-made garments saw an annual decline of 13 percent. During the month of June 2023, cotton yarn exports increased by 7% MoM. Value-added exports reported volume growth of 16 percent on a month-on-month basis.
The ratings are dependent on the management’s ability to improve the entity’s performance trend from core textile operations amidst strong competition and exposure to overall economic slowdown and inflation. Meanwhile, maintaining strong margins and coverages to fulfill financial obligations will remain critical. Improving governance and control environment is also very important.

About the Entity
Be Be Jan Pakistan Limited (‘Be Be Jan’ or ‘The Company’) was incorporated in Punjab, Pakistan as a Private Limited Company on November 19, 1978, under the Companies Ordinance, 1984 (Now the Companies Act, 2017) and was converted into a Public (unlisted) Limited Company with effect from November 08, 2001. The principal business of the Company is the manufacturing and export of fabric and made-ups. The Company operates a single weaving unit with 140 looms. The Company has also two wrapping machines and one sizing machine. The other unit is for the home textile and apparel division with 405 stitching machines. The ownership of the Company rests with the family of Mr. Usman including his mother, brother, and sisters. The major shareholding of the Company is owned by Mr. Usman Ehsan Elahi (58%), Mrs. Aisha Saqib (23%), Mr. Faisal Ehsan Elahi (09%), Ms. Marriam Saqib (2%), Mrs. Sonia Umer (2%) & Mrs. Fareeha Faisal (2%). While the rest is with Be Be Jan Protein Farms (Pvt.) Ltd. The Company has a three-member board with the presence of sponsors and their families. The position of CEO is vested with Mrs. Aisha Saqib.