Meko Denim Mills (Pvt). Limited ("the Company" or "MDML") operates as an unlisted, private limited Company under the Companies Act, 2017.

The Company is a business venture of the Mekotex Group, incorporated on January 21, 2021. This incorporation marked a significant milestone with the strategic transfer of the denim business operations from Mekotex (Private) Limited to MDML, consolidating the Group's commitment to expansion and growth in the textile industry. Founded in 1979 by the late, Mr. Abdul Majid Qasim, the Mekotex Group has built a legacy of excellence in the textile sector. Over the years, the Group was guided by the visionary leadership of Mr. Abdul Majeed, who, along with his three sons—Mr. Khalid Majeed, Mr. Shoaib Majeed, and the late Mr. Ashraf Majeed—played an integral role in the Group's success and continued development.

The Company's operational capabilities span multiple stages of textile production, including spinning, weaving, dyeing, washing, and stitching. Its significant infrastructure features 44,000 spindles, 234 looms, 2,000 rotors, and 600 stitching machines. As part of its growth strategy, the Company significantly expanded its stitching unit located in the SITE area of Karachi, successfully achieving its targeted production capacity. The Company’s registered office is located at F-131 & 152, Hub River Road, SITE, Karachi, providing a strategic hub for its operations. The Company's day-to-day management is overseen by the founding family, with key responsibilities distributed among them: Mr. Shoaib Majeed leads the denim operations while Mr. Khalid Majeed heads the spinning, dyeing, printing, and processing sections. To support its energy-intensive operations, the Company relies on an 8-megawatt power generation boiler, which efficiently meets its energy demands, ensuring smooth and uninterrupted production processes.

The Company’s entire shareholding is held by the sponsoring family through individual shareholders. The Company’s majority stake of 75% is owned by Mr. Shoaib Majeed, comprising his direct shareholding of 50%, along with 20% held through his wife, Ms. Kiran Bano, and 5% held through his son, Mr. Ahmed Shoaib. The remaining 25% stake rests with Mr. Khalid Majeed.

The Company's ownership structure is expected to remain stable in the foreseeable future, with a clear and strategic transfer of shares to the next generation. The division of Group operations among the three brothers highlights the existence of a family constitution, ensuring the seamless continuation of leadership. The family-centric ownership, led by Mr. Shoaib Majeed, provides a hands-on approach and strong continuity, reinforcing the sponsor's long-term vision.

Mr. Shoaib Majeed, the CEO of the Company, holds a degree in Business Administration and plays a pivotal role in overseeing multiple aspects of the family business. With his leadership, the Company continues to thrive under a hands-on approach. Mr. Khalid Majeed, an MBA graduate, serves as the Managing Director, where he is responsible for driving key areas such as business expansion, marketing, human resources, and other critical operations.

The financial strength of the MDML emerges from the group's foothold divested in all aspects of the textile value chain. Apart from Meko Denim, the Group is operating in the local textile industry with two additional companies; Mekotex (Pvt). Limited and Meko Fabrics (Pvt). Limited.

The Company's board comprises five members. The composition of the board includes three executive directors and two non-executive directors. The inclusion of an independent director will strengthen the governance framework of the Company.

Mr. Muhammad Khalid, the Executive Director of the Centre for Learning Law and Business (CLLB), brings over twenty-nine years of extensive experience. Mr. Farhan Ahmed holds a Master’s degree in Business Administration and has been associated with the Company for the past two years. Mr. Muhammad Ahmed, the director of operations at MDML, holds a Bachelor's degree in Business Administration from York University, Canada. He joined the family business last year. Mr. Imran Motiwala, the CEO of AKD Investment Management Limited, offers a wealth of experience across various sectors. The BOD members possess significant expertise, enabling them to offer valuable insights and contribute towards the strategic development.

The Company does not have any formal board committees; relevant matters are presented directly to the BOD members for decision-making purposes.

To uphold 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 financial statements for the year ending on June 30, 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 audit for the fiscal year 2025 is in process and is expected to be completed by the end of January 2026.  

The Company is structured into seven core departments to ensure a smooth flow of operations, each led by a strategic manager who directly reports to the BOD. These departments encompass both operational and support functions, ensuring comprehensive management across the business. The key operational departments include Marketing, Processing, Spinning, Weaving, Power, and Ginning, each responsible for essential aspects of the Company's production and business processes. The head office and finance departments are also integral parts of the organization, overseeing the Company's financial management and administrative functions. In addition to these primary departments, the Company has designated managers for Human Resources (HR) and Administration. These managers, while overseeing their respective areas, ensure alignment between administrative and financial functions.

The Company's strategic managers, each with two decades of experience, contribute to the effective management of operations. The CEO, Mr. Shoaib Majeed completed his graduation in Business Administration and is vell-verse in the textile industry with an experience of over twenty-five years. He is supported by a team of highly qualified and skilled professionals. The CFO, Mr. Rehan Memon, an ACCA-certified professional, oversees financial intricacies and talent development.

The management meetings led by the CEO, are scheduled on a need basis to discuss any operational matters. The overall effectiveness of management could be strengthened by formalizing the management committees.

For comprehensive reporting, the Company has implemented an Oracle-based ERP system with a strong emphasis on monitoring the performance of individual business segments. This performance data is regularly reviewed by the senior management to ensure effective oversight and timely decision-making.

The Company maintains an adequate control environment, supported by both in-house and international sales teams, manual quality control processes, and an established HSE (Health, Safety, and Environment) infrastructure.

Textile exports reached USD 17.9 billion in FY25, a modest rise from USD 16.7 billion the previous year, reflecting a 7.2% year-over-year growth. The largest contribution came from the composite and garments segment, at USD 14 billion, which included the weaving segment at USD 1.8 billion and the spinning segment at USD 0.7 billion. The production of cotton cloth in FY25 declined by approximately 0.7% year over year, reaching around 877.1 million square meters. During FY25, about 25.3% of the cotton cloth produced was exported (compared to roughly 27.2% in FY24), with the rest used for the domestic market. The country's fabric exports fell by approximately 4.4% in FY25 (FY24: up about 5.8% YoY), with approximately 23.4% of Pakistan's cotton cloth exports going to Bangladesh (compared to about 19.9% in FY24), followed by the USA with about 8.1% of cotton cloth exports (compared to approximately 7.8% in FY24). In FY25, the transition from the final tax regime to the normal tax regime is expected to affect the profitability of export-oriented units, with a 29% tax on profits and a super tax of up to 10%. The recent removal of GST exemption (Finance Bill, 2025) on textile inputs for exporters registered under the Export Facilitation Scheme (EFS) will offer tax protection and create a level playing field for domestic cotton and yarn producers. Currently, internat ional cotton prices are higher than the price of locally produced cotton. The gap has widened to approximately 9.8 cents per pound (as of July 18, 2025), resulting in an average increase of about USD 36.8 per bale of imported cotton. A greater reliance on imported cotton could Lead to higher raw material costs, ultimately impacting yarn prices and profit margins for the sector. Conversely, energy and finance costs are expected to stay within a range, given the projected reduction in interest rates and the absence of any major energy tariff increases. Considering the current climate change, flooding in major cotton regions, and shifting crop patterns, the target of approximately 10.2 million bales for FY26 appears challenging.

With a production capacity of 44,000 spindles, 234 looms, 2000 rotors, and 600 stitching machines, the Company is considered an emerging player in the local denim industry.

The Company is engaged in the sale of denim fabric, garments, and knitwear. The Company has experienced a noticeable shift toward international markets, aimed at strengthening its long-term sustainability profile. During FY25, the Company recorded a slight decline in its top line to PKR 16.6 billion, compared to PKR 17.0 billion in FY24. This decrease was primarily driven by a strategic decision to discontinue the sale of coarse yarn, resulting in a decline in local sales to PKR 10.1 billion (FY24: PKR 13.7 billion). Additionally, the Company achieved product diversification through the knitting products, resulting in notable volume expansion. This segment secured healthy margins, and total export sales increased to PKR 6.4 billion (FY24: PKR 4.7 billion). The Company’s export destinations include Bangladesh, Germany, Singapore, China, among others. Denim fabric remains the Company’s foremost product in terms of both pricing and volumes. The Company’s top ten customer concentration remained at a moderate level. This concentration risk is considered manageable due to the long-standing relationships maintained by established entities within the Mekotex Group.

During FY25, the gross profit margin improved significantly to 14.7% (FY24: 8.0%), primarily supported by the procurement of raw cotton at reasonable prices. The Company’s operations are supported by an 8-megawatt power generation boiler and subsidized energy tarriffs which provided a cushion to the core profitability. Despite a substantial rise in operating expenses amid persistent inflationary pressures, the PBIT margin rose to 11.3% (FY24: 6.7%). Higher working capital needs continue to elevate the Company’s finance costs, increasing to PKR 1.3 billion (FY24: PKR 680 million). The Company secured a bottom line of PKR 333 million (FY24: PKR 324 million), translating into a net profit margin of 2.0% (FY24: 1.9%).

In FY25, the Company underwent expansion to support the knitwear achieving its targeted production capacity. The Company also invested in a 5 megawatt solar project as an alternate energy source. Out of this, 4 megawatt solar is currently operational while the remaining 1 megawatt will become operational during FY26.

The Company’s working capital cycle is primarily driven by inventory and trade receivable days, supported through internally generated cash flows and short-term borrowings. In FY25, the Company's net working capital cycle extended to 69 days (FY24: 27 days), following higher inventory holdings. The trade receivable cycle also lengthened to 33 days (FY24: 14 days), indicating a surge in payment collection period from customers. Despite these pressures, the Company upheld a strong liquidity position, evidenced by an improvement in the current ratio to 3.2x (FY24: 2.7x).

In FY25, the improvement in PBT contributed to stronger Free Cash Flows from Operations (FCFO), which rose to PKR 1.8 billion (FY24: PKR 277 million). Although borrowing costs remained elevated, the enhanced FCFO supported a notable recovery in both the interest coverage ratio and the core operating coverage ratio. The maintenance of the coverage ratios remain critical for the assigned ratings.

The Company’s debt structure consists of a mix of related-party financing and short-term borrowings, including facilities availed under the State Bank of Pakistan’s Export Refinance Scheme (ERF) alongside conventional bank borrowings. The capital structure remains leveraged, largely driven by the reliance on short-term debt to fund working capital needs. In FY25, total leverage tapered slightly to 53.8% (FY24: 54.0%). Meanwhile, the equity base strengthened to PKR 5.4 billion, supported by an increase in unappropriated profits to PKR 735 million (FY24: PKR 402 million).