PACRA Assigns Initial Entity Ratings to Meko Fabrics (Pvt). Limited

The ratings of Meko Fabrics (Pvt.) Limited (“MFPL” or “the Company”) derive their rationale from the evolving and strengthening business profile of its sponsors. MFPL operates under the umbrella of the Mekotex Group, a family-owned business with a rich operational track record spanning over five decades. Over the years, the Group has developed a strong foothold in the textile industry through deliberate and phased expansion, encompassing the entire textile value chain from upstream operations such as ginning to downstream value-added segments, primarily denim and home textiles. This vertical integration has contributed significantly to the Group’s operational resilience and long-term sustainability. Lately, the Group underwent a corporate restructuring, through which the local business operations of its flagship entity, Mekotex (Pvt.) Limited, were carved out and transferred to a newly established group company, Meko Fabrics (Pvt.) Limited. The Company's core operational activities will comprise spinning and weaving, while processing functions will be outsourced to Mekotex (Pvt.) Limited. In line with this strategy, management is in the process of gradually transferring 64,000 spindles and 154 looms to the Company. The Company’s product portfolio primarily consists of unstitched lawn dresses, and some of the prominent names in the retail chain are among its customers. Going forward, the management plans to establish an embroidery section to offer value-added services and cater to customized, product-specific customer demands. The Company commenced commercial production in January 2025 and recorded a topline of PKR 503mln during 10MFY25. Looking ahead, the management is focused on expanding its customer base, with active efforts underway for the onboarding of new clients, and anticipates a significant uptick in the business volumes. The Company finances its working capital requirements through a combination of internally generated cash flows and interest-free subordinated debt. During the initial production cycle, the working capital cycle remained stretched; however, it is expected to rationalize once the operational efficiencies are gradually realized. The management intends to maintain a favorable capital structure by formulating a strategy that minimizes reliance on conventional debt.
The ratings are dependent upon the Company’s ability to reach its optimum capacity utilization. The key credit quality metrics of the Company will develop as the business grows. Adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

About the Entity
Meko Fabrics (Pvt). Limited (formerly Meko Textile Industries (Pvt). Limited) operates as a private limited Company, incorporated on February 17, 2023. It is a business venture of the Mekotex Group, owned by the Majeed Family. A majority stake of 75% is held by Mr. Khaild Majeed, distributed equally (25% each) among himself and his two spouses. The remaining 25% stake is held by his brother, Mr. Shoaib Majeed. The Company’s principal business is the processing, manufacturing and trading of textile finished goods and raw materials. The Company has a sponsor-dominated board and the inclusion of an independent director would strengthen the governance framework of the Company.