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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Aug-21

Analyst
Kanwal Ejaz
kanwal.ejaz@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of M.Y. Bari Mills (Pvt.) Limited

Rating Type Entity
Current
(04-Aug-21)
Previous
(06-Aug-20)
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Bari Mills is a family-owned private company operated by a seasoned business family of Karachi. The Company is primarily an export oriented, towel manufacturing concern. Overall export volumes of towel industry inclined during FY21. During 1HFY21 towel exports stood at PKR~72bln (USD~446mln) as compared to PKR~59bln (USD~379mln) in 1HFY20. This exhibited a growth of ~23% in PKR terms. Meanwhile, there was ~9% growth in quantitative terms. Growth in towel export sector was witnessed as Pakistan was able to attract export orders when regional players were struggling due to the pandemic and unable to meet demand. During 1HFY21, towel sector’s contribution to overall textile exports was ~6%. Meanwhile, contribution to total country exports was ~3%. Towel industry enjoys relatively better margins that are reflected in MY Bari's profitability on the back of local cotton, which is more suitable for manufacturing towels. During 9MFY21 revenue of the Company significantly improved due to high towel demand from international markets i.e. Europe & USA. The revenues are expected to follow upward trajectory. However, this could be disrupted or slowdown by fourth wave of COVID-19. On standalone basis, the Company’s concentration levels – both customer and geographical – are high with majority of company revenues (~46%) emanates from a single customer. Bari Mills continues to maintain leveraged capital structure. Due to prudent working capital management, working capital cycle of the Company showed improvements. Cash flows also posted a healthy growth resulted in better coverages. Going forward, in absence of any further debt-driven expansion in the medium-term, financial profile is expected to further improve.
The ratings are dependent on maintaining optimal operations and top-line amidst expected tough situation due to emerging fourth wave of Covid-19. Sustaining margins and reducing customer concentration, while maintaining financial risk at low level is critical. Meanwhile, strengthening of governance framework for better oversight of strategic affairs is considered essential.

About the Entity
M.Y. Bari Mills (Pvt.) Limited (Bari Mills) was incorporated in 2012 as a private limited company. Primary business of the Company is to manufacture and export towels with a total installed capacity of 144 looms. Mr. Haroon Bari owns 20% of shares and the remaining shareholding is evenly distributed among his five sons (16% each). The BoD comprises five members with Mr. Haroon Bari as Chairman. He brings ~48 years of experience in textile industry with him. The CEO of the Company is Mr. Nabeel Haroon Bari, a graduate from UK in the field of commerce with overall working experience of ~20 years with the group. There is no independent director on the board.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.