Beacon Impex (Pvt.) Limited

CREDIT RATING REPORT | May-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
12-May-25 A A1 Stable Maintain -
05-Jun-24 A A1 Stable Initial -
About the Entity

Beacon Impex commenced operations in 2005. The majority shareholding lies with the Company's CEO, Mr. Muhammad Shakeel Faridi, the director, Mr. Mudassar Zafar, and other sponsors. The Company has a capacity of ~7.4mln garments per month and knitted products. The Board comprises two BoDs, including the CEO, Mr. Muhammad Shakeel Faridi, and Mr. Mudassar Zafar.

Rating Rationale

The assigned rating of Beacon Impex Pvt. Limited (“the Company” or “Beacon Impex”) reflects its prominent position in Pakistan’s textile sector, particularly as a trailblazer in the specialized underwear/bodywear segment. The Company operates as a fully vertically integrated knitwear garments manufacturer, with in-house processes encompassing the entire textile value chain—including spinning, knitting, elastic production, dyeing, processing, cutting, and garment assembly. The Company operates a state-of-the-art manufacturing facility equipped with modern machinery that adheres to high-end international standards. It has achieved significant automation across the textile value chain and maintains a congenial working environment for its labor force. Additionally, the Company has developed an automated, centrally integrated dashboard system based on key performance indicators (KPIs) to monitor real-time facility performance and identify process inefficiencies. The implementation of RFID and barcode-based backtracking systems has enabled end-to-end product traceability through a single scan, thereby strengthening the Company’s overall control environment. Bodywear garments form the cornerstone of the Company’s product portfolio, with boxers and briefs occupying a dominant share in its sales composition. Beacon Impex’s clientele comprises globally recognized brands, with Puma leading the revenue contribution in FY24, followed by Hugo Boss, Levi’s, and Amazon. The Company's top line grew by 29.5% in 1HFY25, reaching PKR 23,479mln (FY24: PKR 36,274mln), primarily driven by improved business volumes. Beacon Impex is an export-oriented company, as evidenced by its sales mix, with Europe being its primary export destination. The Company's gross margins have declined, primarily due to raw material prices, inflation, wages increase, and a steady USD conversion rate. The Company's financial risk profile is considered good, supported by optimal working capital management. Despite a dilution in operating profit, cash flows remain sufficient with moderate coverage. Net working capital requirements are primarily financed through short-term borrowings, supplemented by internally generated cash flows. To diversify its funding base, the Company has recently initiated the issuance of commercial paper. Beacon Impex maintains a leveraged capital structure, with approximately 58.0% of its debt comprising STB, while the remaining debt primarily consists of long-term conventional loans used to fund CAPEX in the textile value chain over the years. Textile exports to the US totalled USD 4.02bln in FY24 and USD 2.83bln during 8MFY25. Recently, the US announced the imposition of a flat 29.0% trade tariff on Pakistan; however, its implementation has been deferred for 90 days. The Company maintains approximately 20% exposure to the US market.

Key Rating Drivers

The ratings are dependent on the Company's ability to sustain its business profile while maintaining its profitability matrix at an optimal level. The sustainability of margins and improvement in coverages while expanding business volumes remain critical. The compliance with corporate governance will be further strengthened by the inclusion of an independent oversight function. Adherence to the debt matrix at a moderate level is a prerequisite for assigned ratings

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Beacon Impex (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Beacon Impex (Pvt.) Limited (“The Company”) was incorporated in Pakistan as a private limited company on December 2nd, 2005 under the Companies Ordinance 1984 (Repealed with the enactment of the Companies Act, 2017).


Background

Beacon Impex (Pvt.) Limited was incorporated in 2005 as an IT service-providing corporation. and has developed itself into a growing vertically integrated unit by setting up conversion and doubling units in 2012 and eventually entered in the garment export business in 2018.


Operations

The principal business activity of the Company is the manufacturing and sale of garments and yarn, and the trading of textile products. The company's operations are divided into five divisions: Yarn, Elastic, Fabric, Denim, and Apparel. The Company has established a strong presence in the dedicated bodywear industry for approximately one decade, and a production of ~7.4 million garments each month. The registered office of the Company is situated at P-102 Jail Road, Faisalabad. The Company’s energy requirement stands at 9.3MW, which is primarily met through solar capacity, FESCO, and RLNG. 


Ownership
Ownership Structure

The majority of the shareholding is vested with the Company's Chief Executive Officer, Mr. Muhammad Shakeel Faridi, and Director, Mr. Mudassar Zafar, along with other sponsoring shareholders. This concentrated ownership reflects strong sponsor backing and direct involvement of the top management in the strategic and operational direction of the Company.


Stability

The sponsors have a long-term association with the Company and the textile business. The next generation is also engaged in business (Mr. Muhammad Nazir Ahmed). A formal documented succession plan will augment the ownership framework of the Company.


Business Acumen

Mr. Muhammad Nazir Ahmed is considered a man of the last mile. He has been associated with the Company for the last eight years where he has played a pivotal role in driving organizational growth and operational excellence. His expertise lies in strategic management, supply chain optimization, and fostering innovation within the textile industry. 


Financial Strength

The financial strength of the Company primarily divests in a single line of business. The Sponsors of the Company are committed to supporting the Company in times of intricacy


Governance
Board Structure

Beacon Impex’s BoD consists of two members, both occupy executive roles – including the CEO, Mr. Muhammad Shakeel Faridi while Mr. Mudassar Zafar is designated as director. Both directors have more than 20 years of relevant experience and have been associated with the company for the last 10 years. The inclusion of independent oversight will further improve the governance framework of the Company.


Members’ Profile

Mr. Shakeel Faridi- The CEO holds a master's degree in computer sciences. The board members carry vast knowledge and extensive experiences in the textile industry. Mr. Mudassar Zafar has vast experience of more than 20 years in the textile industry and is associated with the Company since 2013.


Board Effectiveness

Three committees: Audit Committee, HR Committee, and Risk Committee,  are in place to assist the board in relevant matters and ensure proper oversight.


Financial Transparency

Kreston Hyder Bhimji & Co. who are listed as category “A” on the SBP’s panel of auditors, are external auditors of the Company. They have expressed an unqualified opinion on the financial statements of the Company for the year ended June 30, 2024.


Management
Organizational Structure

The organizational structure is a well-organized, hierarchical system that ensures strong governance, clear accountability, and efficient operations.  The Board of Directors exercises oversight through key committees, while the CEO maintains centralized leadership across strategic, operational, financial, and risk areas. The separation between the CSO, MD, and CFO ensures focused leadership in planning, execution, and financial management. Operational units under the MD are specialized by business areas like garments, knitting, and polyester, while support functions like Compliance, IT, and Supply Chain are integrated under the CSO. Overall, the structure promotes clarity and specialization, though maintaining inter-departmental coordination will be key as the organization grows.


Management Team

The management team is headed by the CEO. He is supported by a team of seasoned professionals, who supplement his expertise. Mr. Khalid Mehmood, the CFO,  holds a master’s in business administration and has extensive experience of over 11 years under his belt.


Effectiveness

The management meetings are held periodically with the follow-up points to resolve or proactively address operational and administrative issues, if any, eventually ensuring a smooth flow of operations. The management is assisted by four committees: Business Development Committee, Corporate Social Responsibility Committee, Financial Management and Compliance Committee, and Operations Planning and Coordination Committee, ensuring strong effectiveness. 


MIS

The Company has developed an in-house state-of-the-art integrated ERP system, which is designed in Oracle 6i, enabling it to efficiently monitor and control production, inventory, and quality levels.


Control Environment

The Company has built an automated and centrally integrated KPIs-based assessment dashboard system to analyze real-time facility performance and address process inefficiencies. The execution of RFID and barcode-based traceback systems has enabled the Company to access final product traceability via a single scan, which escalates the control environment of the Company. The Company has an in-house internal audit department with quarterly reporting frequency, and it is directly reportable to the audit committee. The Company has an in-house internal department. 


Business Risk
Industry Dynamics

The textile exports of the country reached USD 16.7bln in FY24, 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. During 6MFY25, the textile exports stood at USD 9.1bln. 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%. The consistent decline in policy rates over the last two quarters, along with the anticipation of further reductions, is expected to provide a cushion in the financial metrics of the industry


Relative Position

The Company has established its footprints in the dedicated bodywear industry over a time of ~01 decade. The Company has production capacity of ~7.4 million garments per month. The Company is ranked at 38th in the top 100 textile exporters of FY24. The relative position of the Company is considered strong in the dedicated bodywear segment.


Revenues

During FY24, the Company’s revenue base witnessed sizeable growth and stood at PKR 36.3bln (FY23: PKR 29.4bln) & PKR 23.5bln in 6MFY25. The Company’s revenue base is dominated by the direct export sales of the bodywear segment, followed by yarn.  As of FY24, Puma is Beacon Impex's top client in terms of business contribution, followed by Hugo Boss, Levi’s, and Amazon. The revenue base is mainly dominated by Europe, followed by North America, Asia and others.


Margins

During FY24, the gross profit margin of the Company declined and stood at 18.6% (FY23: 23.8%) & 13.4% in 6MFY25, dipping slightly mainly on the back of the elevation in local raw cotton prices. While the operating margin witnessed a decline to stand at 15.1% (FY23: 17.0%). The finance cost of the company surged to PKR 1,951mln (FY23: PKR 923mln). Consequently, the company’s net margin stood at 8.0% in FY24 (FY23: 12.4%) & 4.3% in 6MFY25, impacted by finance costs over time.


Sustainability

The management of the Company is mindful to keep aligning their performance with the financial projections. The Company has consistently undergone CAPEX from 2019 to 2024 in all textile product value chains. The majority of the CAPEX is executed in the processing segment, followed by garments, spinning, PET polyester, Knitting, & elastic. The Company has also executed CAPEX in renewable energy to counter the elevated energy cost risk prevailing in the industry.


Financial Risk
Working capital

The inventory days stood at 59 days as of 6MFY25 (FY24: 59 days) owing to the procurement of cotton, while finished inventory levels remained high to cater to international orders and local retail demand. As of 6MFY25, the net working capital days stood at 61 days. (FY24: 66days). The Company has efficiently managed its working capital cycle. The Company’s short-term trade leverage stood at 18.5% as of FY24. The working capital requirements were met through short-term borrowings along with internally generated cashflows


Coverages

During FY24, free cash flow from operations (FCFO) displayed a rise to PKR 6.1bln (FY23: PKR 5.5bln). During FY24, the interest coverage clocked to 3.3x (FY23: 6.7x) and debt coverage stood to 2.1x (FY23: 3.6x). The company's FCFO clocked at PKR 2.5bln during 6MFY25, keeping the interest coverage and debt coverage ratio at 2.8x and 1.7x, respectively.


Capitalization

The company has a leveraged capital structure (6MFY25: 46.4%,  FY24: 44.1%, FY23: 42.1%). Out of the total debt, 58% (FY24: 54%) of the debt comprises short-term borrowings. The short-term borrowings of the Company stood at PKR 8.4bln and long-term borrowings PKR 4.8bln during 6MFY25. The equity base of the Company recorded good growth to PKR 15.5bln as of FY24 (FY23: PKR 12.1bln) & PKR 16.6bln in 6MFY25. Over the years, the company's leverage increased slightly and stood at 46.4% during 6MFY25.
 
 

May-25

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Beacon Impex (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 19,217 18,557 13,035 8,901
2. Investments 148 148 148 300
3. Related Party Exposure 171 157 118 82
4. Current Assets 19,978 17,890 14,392 9,291
a. Inventories 7,969 7,328 4,412 2,388
b. Trade Receivables 5,701 4,704 5,719 4,130
5. Total Assets 39,514 36,752 27,693 18,575
6. Current Liabilities 7,683 8,042 6,136 4,367
a. Trade Payables 4,948 5,042 4,050 2,671
7. Borrowings 14,382 12,282 8,813 5,290
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 858 853 612 443
10. Net Assets 16,592 15,576 12,133 8,476
11. Shareholders' Equity 16,592 15,576 12,133 8,476
B. INCOME STATEMENT
1. Sales 23,479 36,274 29,413 20,200
a. Cost of Good Sold (20,324) (29,510) (22,422) (15,402)
2. Gross Profit 3,155 6,764 6,991 4,798
a. Operating Expenses (915) (1,617) (1,669) (1,316)
3. Operating Profit 2,239 5,147 5,321 3,482
a. Non Operating Income or (Expense) 100 337 (309) (225)
4. Profit or (Loss) before Interest and Tax 2,339 5,484 5,013 3,258
a. Total Finance Cost (959) (1,951) (923) (245)
b. Taxation (364) (621) (449) (300)
6. Net Income Or (Loss) 1,016 2,912 3,641 2,712
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 2,534 6,076 5,517 3,605
b. Net Cash from Operating Activities before Working Capital Changes 1,495 4,339 4,857 3,411
c. Changes in Working Capital (2,359) (1,663) (3,452) (2,291)
1. Net Cash provided by Operating Activities (864) 2,675 1,405 1,120
2. Net Cash (Used in) or Available From Investing Activities (1,175) (5,708) (4,472) (2,979)
3. Net Cash (Used in) or Available From Financing Activities 2,049 3,142 3,154 1,879
4. Net Cash generated or (Used) during the period 10 109 88 20
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 29.5% 23.3% 45.6% 69.7%
b. Gross Profit Margin 13.4% 18.6% 23.8% 23.8%
c. Net Profit Margin 4.3% 8.0% 12.4% 13.4%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 0.7% 12.2% 7.0% 6.5%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 12.6% 21.0% 35.3% 39.5%
2. Working Capital Management
a. Gross Working Capital (Average Days) 100 112 103 113
b. Net Working Capital (Average Days) 61 66 62 70
c. Current Ratio (Current Assets / Current Liabilities) 2.6 2.2 2.3 2.1
3. Coverages
a. EBITDA / Finance Cost 3.4 3.7 7.4 22.2
b. FCFO / Finance Cost+CMLTB+Excess STB 1.7 2.1 3.6 5.2
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 1.8 1.3 0.9 0.6
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 46.4% 44.1% 42.1% 38.4%
b. Interest or Markup Payable (Days) 46.3 68.9 109.1 103.6
c. Entity Average Borrowing Rate 14.6% 17.6% 11.7% 3.8%

May-25

www.pacra.com

Beacon Impex (Pvt.) Limited

rating scale

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May-25

www.pacra.com

Beacon Impex (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
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  6. Probability of Default
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May-25

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