PACRA Maintains the Entity Ratings of Mekotex (Pvt). Limited

The ratings reflect the presence of Mekotex (Pvt). Limited (“MPL” or “the Company”) in the competitive textile landscape. The assigned ratings are underpinned by the sponsor's established business profile and sound financial strength. MPL operates as the flagship Company 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. In FY24, the Mekotex Group underwent strategic restructuring aimed at reinforcing its foothold in a rapidly evolving industry and promoting specialization across its business verticals. As part of the transition, operational responsibilities have been strategically allocated among the three sponsoring brothers and their respective families, indicating deliberate succession planning. A key outcome of this restructuring has been the gradual transfer of KAM International’s export business to MPL, further strengthening its position as the Group’s primary export arm. Concurrently, the Company’s local market operations are being transitioned to Meko Fabrics (Pvt.) Limited, a dedicated group entity focused on domestic business. Management is actively pursuing the ongoing transfer of assets, which is unfolding in a structured manner and is anticipated to be fully completed by the end of FY26. The Company’s product slate primarily comprises the sale of home textile articles and unstitched printed dresses for women. In 9MFY25, the Company’s topline stood at PKR 18.9bln, compared to PKR 20.8bln in 9MFY24. The decline is primarily attributable to the carveout of the local business to another Group entity. However, on a consolidated basis, overall business volumes have largely remained stable. Gross margins experienced a squeeze due to a significant rise in gas tariffs over the past two years, coupled with increases in minimum wage rates. The stability in the USD conversion rate further constrained pricing flexibility, aligning with broader industry trends. However, the prudent management of the funding matrix, coupled with a gradual decrease in interest rates, has benefited the Company’s net profitability matrix. As a result, the bottom line registered notable growth on quarter-on-quarter growth, reaching PKR 384mln (9MFY24: PKR 106mln). The net working capital requirements of the Company are primarily fueled through short-term borrowings. The financial risk profile of the Company is adequate, with a slightly stretched working capital cycle depicting the industry norm. The cash flows and coverage ratios of the Company remained within a moderate range. Management is actively pursuing opportunities to leverage its presence in the international market and remains optimistic about sustained growth in business volumes over time.
The ratings are dependent on the Company’s ability to sustain profitability while expanding the business operations. Going forward, the generation of sufficient cash flows and improvement in coverages remain essential, particularly amid the Group’s ongoing strategic transition. Adherence to sound credit quality metrics remains critical for the assigned ratings.

About the Entity
Mekotex Pvt. Limited was incorporated in 1991. The operational spectrum of MPL encompasses ginning, spinning, weaving, processing, and digital printing. The entire stake in the Company is owned by members of the Majeed family through individual holdings. 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 overall control of the board is vested with five members. The CEO, Mr. Khalid Majeed, is supported by a highly qualified management team.