Mekotex (Pvt.) Limited ("MPL" or "the Company") was incorporated in Pakistan on August 21, 1991 as a private limited Company and registered under the Companies Ordinance, 1984 (Repealed with the enactment of the Companies Act, 2017).

The foundation of the Mekotex group was laid by Mr. Abdul Majid Qasim (late) in 1979, and it has since evolved into one of the leading denim manufacturers. Mekotex, the group’s flagship Company, was pioneered by Mr. Abdul Majid’s sons: Mr. Ebrahim Qasim and his elder brother, Mr. Abdul Majeed. Mr. Ebrahim Qasim exited the Company in 2001 after the family decided to split the family wealth among family members. Incorporated in 1971, Mekotex (Pvt). Limited began as a modest fabric trading operation and has since evolved into a prominent player in the textile sector. The Group’s sustained growth and diversification have been driven by the entrepreneurial leadership of the three brothers, with increasing involvement from the next generation.

The operational infrastructure of the Company comprises ginning, spinning, weaving, processing, and stitching of textile products. Its head office is located at Deh Landhi, Main National Highway, Karachi. The Company is self-sufficient in power production with a total capacity of ~29MW. The Company uses natural gas as fuel for its power generation. The Company is also self-sufficient in terms of water supply and has installed an RO (river osmosis) plant in Karachi. Looking ahead, a significant chunk of the spinning and weaving operations currently owned by Mekotex (Pvt.) Limited will be gradually transferred to Meko Fabrics (Pvt.) Limited as part of the Group’s ongoing restructuring strategy.

The Company is entirely owned by members of the Majeed family through individual shareholdings. A majority stake of approximately 48% is held by Mr. Ashraf’s immediate family, comprising his spouse, Ms. Almas Ashraf (~21%), and his two children, Mr. Rayyan Ashraf (~21%) and Ms. Rabia Saad Admani (~6%). The remaining stake rests with Mr. Khalid Majeed (~25%) and other family members (~27%).

The Company’s ownership structure is expected to remain stable in the foreseeable future, supported by a clearly defined family constitution and the strategic transfer of shareholding to the next generation following the passing of Mr. Ashraf Majeed. This transition is guided by the Group’s long-term vision for continuity and strong governance within the family enterprise.

With an operational legacy spanning over five decades since its inception in 1971, the sponsors have established a considerable presence in the textile industry. Over the years, the Group has demonstrated resilience and adaptability through various economic cycles and market fluctuations, consistently expanding and diversifying its business portfolio. Strategic investments and gradual penetration into high-potential segments, such as denim, home textiles, and value-added fabric processing have significantly enhanced the Group’s overall market positioning.

The financial strength of MPL stems from the Group’s notable presence across multiple segments of the textile value chain. Beyond MPL, the Group actively operates within the local textile industry through two additional companies: Meko Fabrics (Pvt.) Limited engaged in the sale of unstitched dresses for women, and Meko Denim Mills (Pvt.) Limited, focusing on denim manufacturing.

The overall control of the board vests in a five-member Board of Directors, three sponsors, and two non-executive independent directors. However, the Company's board is still dominated by the sponsoring family. The inclusion of an independent director will strengthen the governance framework of the Company.

Mr. Khalid Majeed started his business and industrial career after completing his Master’s in Business Administration from Clayton State University. During his studies, he was already involved with the family’s industrial ventures, gaining practical experience in reputable textile spinning and weaving units. He initially joined Arif Industries, where he continues to serve as a Partner. In 1991, he founded a textile spinning unit named Mekotex (Private) Limited and has since been serving as its Managing Director. In this role, he has overseen the company’s expansions and managed marketing, human resources, procurement, finance, and technical operations. Additionally, he supervises the development of quality standards to meet ISO 9002 certification requirements and is currently working towards ISO 14000 and SA 8000 certifications. Mr. Shoaib Majeed graduated with a degree in Business Administration in 1994 and promptly joined the family business. His initial role involved managing and establishing the home textile division, Kam International, founded in the same year. Since 1995, he has also overseen procurement and finance operations at Arif Industries. He joined the Board of Directors of Mekotex in 2002, where he manages the purchasing department and oversees the Group’s finances. Beyond his corporate responsibilities, Mr. Shoaib is actively involved in various social and industry organizations. Notably, he served as Vice Chairman of All Pakistan Textile Processing Mills Association (APTMA), Zonal Chairman of the All Pakistan Bedware and Upholstery Manufacturers Association, and holds executive committee memberships in the Landhi Association of Trade and Industry, Karachi Chamber of Commerce, and S.I.T.E Association. The board members bring with them diversified experience and knowledge of the respective industry at local and international levels, which assists in providing useful insight for the development of an effective business strategy. Mr. Rayyan Ashraf holds a Bachelor's degree in Arts from the University of Toronto. He possesses over 10 years of experience in the textile industry. Mr. Farhan Ahmed and Mr. Imran Motiwala have been associated with the Company for approximately eight years, bringing with them diverse business expertise and valuable insights to the Board.

The Company does not have formal board committees to support its oversight functions. While the Board meets regularly, financial performance is reviewed through Excel-based reports and the progress toward the strategic goals is evaluated during these discussions. Board attendance remained strong throughout FY24, and draft minutes were documented. To strengthen oversight and align with best corporate governance practices, the establishment of formal board committees is essential.

To maintain high standards of transparency, Crowe Hussain Chaudhary & Co. Chartered Accountants have been appointed as the external auditors of the Company. They expressed an unqualified opinion on the financial statements of the Company for the period ended June 30th, 2024. The firm is QCR-rated by the Institute of Chartered Accountants of Pakistan (ICAP) and is classified in Category 'A' by the State Bank of Pakistan (SBP) panel of auditors.

The Company's organizational layout is structured into seven key departments, each led by a departmental head classified as a “strategic manager,” all of whom report directly to the Board of Directors. These core departments include Finance (back-office function) and six business operations units: Marketing, Processing, Spinning, Weaving, Power, and Ginning. 

The CEO, Mr. Khalid Majeed, an MBA graduate, has around 35 years of experience in the respective industry and serves as the Managing Director. He is responsible for driving key areas such as business expansion, marketing, human resources, and other critical operations. Mr. Ismail Qaiser, the Chief Financial Officer & Company Secretary, is a qualified member of ICMA. He is well-versed in the textile sector and has been associated with the Mekotex group for over twenty-two years.

The Company currently does not have formal management committees in place. Management meetings are held on an ad-hoc basis, as and when required. The effectiveness of management could be improved through the establishment of formal committees with clearly defined roles and responsibilities.

The Company’s IT infrastructure is anchored by an in-house Oracle-based ERP system, which enables comprehensive reporting and operational efficiency. This system is fully integrated across all major departments, including Finance, Supply Chain, Sales, and Human Resources, ensuring seamless data flow and coordination. It has been meticulously designed in alignment with the strategic directives and specific reporting requirements of the Board, thereby facilitating informed decision-making.

The Company has adequate quality control procedures in place to enhance operational efficiency and minimize wastage. These measures ensure product consistency and adherence to industry standards. Additionally, the Company operates with an independent internal audit function to regularly assess internal controls and compliance, supporting transparency and governance.

Textile exports of the country reached USD 16.7bln in 9MFY25, a slight increase from USD 16.5bln in the previous year, reflecting a growth of 0.93% YoY. The highest contribution came from the composite and garments segment at USD 9.1bln, followed by the weaving segment at USD 6.5bln and the spinning segment at USD 1.0bln. In FY25, the transition from the final tax regime to the normal tax regime is set to impact the profitability matrix of export-oriented units, with a 29% tax on profits and a super tax of up to 10%.

With 110,000 spindles, 450 looms, and 5 digital printing machines, the Company has an adequate position on a standalone basis and is considered a mid-tier player in the respective industry.

The Company's topline experienced a 3-year CAGR of 15.5% from June 2022 to June 2024, reaching PKR 27.4bln (FY23: PKR 29.0bln). During FY24, local sales remained the primary revenue contributor, comprising approximately 81% of total revenue recorded at PKR 24.5bln (FY23: PKR 27.9bln). During 9MFY25, the Company’s revenue base experienced a dip to stand at PKR 18.9bln (9MFY24: PKR 20.8bln), primarily due to the strategic transfer of certain operations to a group entity as part of an internal restructuring initiative, alongside prevailing macroeconomic challenges. The Company’s export sales remained largely the same at PKR 4.0bln (9MFY24: PKR 3.9bln). The Company’s local sales registered a downward trend clocking at PKR 16.8bln (9MFY24: PKR 19.9bln), reflecting the phased divestment of domestic operations.

During FY24, the Company’s gross profit margin inched up to 11.6% (FY23: 10.3%). The same trend has been displayed by the Company’s operating margin recorded at 8.6% (FY23: 7.3%), attributable to controlled operating expenses clocking at PKR 821mln (FY23: PKR 855mln). The finance cost exhibited a slight decrease YoY at PKR 2.4bln (FY23: PKR 2.7bln) on the back of a gradual decrease in interest rates. However, the higher taxation burden consumed the bottom line. Resultantly, the Company incurred net losses of PKR 212mln against the net profit of PKR 287mln. Hence, the net profit margin clocked at -0.8% (FY23: 1.0%). During 9MFY25, the Company’s gross margin went down to 9.3% (9MFY24: 15.3%), primarily driven by elevated energy costs and a revision in the minimum wage rate. Following a gradual decrease in the key policy rate, the finance cost witnessed a sizable decrease at PKR 988mln (9MFY24: PKR 1.8bln). The Company’s bottom line displayed an improvement to stand at PKR 384mln (9MFY24: PKR 106mln) with the net profit margin of 2.0% (9MFY24: 0.5%).

On the strategic side, the Company is currently in the process of transferring its spinning and weaving business operations to Meko Fabrics (Pvt). Limited and the home textile business will be gradually transferred to Mekotex (Pvt). Limited.

The Company primarily finances its working capital requirements through short-term borrowings. As of end-Mar25, the Company’s gross working capital cycle remained stretched at 136 days (end-Jun24: 134 days) on the back of a reduction in the inventory cycle to 88 days (end-Jun24: 92 days). The Company has an adequate borrowing capacity as illustrated by the short-term trade leverage of 11.1% (end-Jun24: 8.2%). The Company has maintained its liquidity profile within a reasonable range, as evident by the current ratio of 3.9 (end-Jun24: 3.6).

At end-Jun24, the Company's free cash flows from operations (FCFO) were recorded at PKR 950mln (end-Jun23: PKR 2.8bln). This decline, coupled with elevated finance costs, led to a slight reduction in the coverage ratios. During the period, EBITDA/Finance cost and core operating coverage remained in a moderate range. The improvement in the coverages remains essential, going forward.

The Company has maintained a moderately leveraged capital structure. As of end-Mar25, the Company’s total leveraging declined to 44.2% (end-Jun24: 47.2%). The total borrowings of the Company slightly decreased and clocked at PKR 9.3bln (end-Jun24: PKR 9.5bln). The debt profile remained heavily concentrated towards the short-term borrowings, constituting ~75% of the total debt book to finance the extensive working capital requirements and stood at PKR 7.0bln (end-Jun24: PKR 6.5bln). The Company’s equity base strengthened further to PKR 11.8bln (end-Jun24: PKR 10.6bln).