Lahore, December 12, 2022 (PPI-OT):Be Be Jan Pakistan Limited is enjoying the position as one of Pakistan’s icons of the textile industry with huge capacity in vertically integrated manufacturing facilities. The Company is covering all textile operations necessary to produce high-quality hospitality, healthcare, and home textile products. The Company is also a manufacturer and exporter of high-quality work wear for companies, organizations, and institutions, with a diverse product line. The Company has sound internal control and IT framework; Room for improvement exists in the governance structure given the absence of independent oversight on the board. The family management control good.
The ratings incorporate the progressive growth of the Company over the years. While crossing the PKR 6bln of topline in FY22 (FY21: PKR 4.1bln). The increase in topline is primarily driven by an increase in fabric prices, while volumetric growth remained nominal. Expansion in volumetric growth is essential. Sales mix represents a major contribution from the export market (FY22: 80% of total revenue (FY21: 77%). Overall concentration risk remains elevated. Profitability margins (on both gross and net basis), following a decline in FY22, fell further in the ongoing year due to of an increasing trend in yarn prices and a significant uptick in power and energy cost. The liquidity profile is underpinned by adequate cash flow coverages in relation to outstanding obligations. The Company continues to maintain a moderately leveraged capital structure.
During FY22, Pakistan’s textile exports surged to $19.3bln (recording a growth of 26%). Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record-high cotton prices. In July to August 2022, the cumulative exports of knitwear increased by 15.4% to $1.32 billion; cotton cloth by 4.2% to $580.5 million, and readymade garments by 5.9% to $911.5 million over their exports in the same period of last year.
However, bed wear exports were down 2.9% to $780 million, towels 1.7% to $237.3 million, and cotton yarn sales declined by 18%. However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The ratings are dependent on the management’s ability to uphold the entity’s growing performance trend. Meanwhile, maintaining strong margins and coverages to fulfill financial obligations will remain critical.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
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Email: hammad.rashid@pacra.com
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