Lahore, January 30, 2023 (PPI-OT):KAM International is a prominent textile venture of the Mekotex group. The group has a presence in the textile, energy, and water supply sectors through five established companies Mekotex, Meko Denim, Innovative Energy Solutions, Aquagen, and KAM International. It has been operational as a single-member company with a history of more than two decades. The Company is principally engaged in the manufacturing and export of home textiles (Bedding sets and a variety of napkins, towels, and table cloth). Broad product slate has assisted the company in strengthening its position over the years.
The Company’s management involves experienced professionals, aided by comprehensive reporting, looking after the operations with complete autonomy. Its established business profile emanates from a strong presence in the broader value chain; enabling the company to manage volatility in the textile industry. The sales mix, dominated by exports, displays a steady improvement over the years. The Company enjoys an established customer base with several export destinations in European Countries (80%) and the United States of America (20%).
The management is planning further penetration in USA/ Canada market in the upcoming years. During FY22, the top line recorded at PKR 10.9bln (FY21: PKR 10.4bln), where 96% (FY21: 97%) vests with exports. However, the gross margin registered a slight drop. Going forward, given the export market depicting a recessionary trend, volumetric offtakes are forecasted to stay under pressure while the management is expecting the sales number to stay intact. The liquidity profile of the Company is considered adequate in relation to outstanding obligations.
During 5MFY23, textile exports were valued at $7.44bln compared to $7.76bln, reflecting a 4% dip YoY – the declining trend recorded in the last two months. The fall in export value has mainly come from volumetric decline as prices of almost all categories have either increased or stayed flat. This has taken a fiscal year to date exports into negative with a 1.4% decline in the first four months (July – October) FY23. Among value-added items, bed wear has witnessed the largest decline of 19% (on an MoM basis), down to $217 million. Knitwear remained on the downward path in October 2022 and declined by 10% to $392 million. Among non-value-added items, the cotton yarn has shown the largest decline of 35%. Moreover, 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 sustaining the business profile of the Company by maintaining profitability and margins achieved from core textile operations. At the same time, sustainability of income and prudent management of the surplus funds are important.
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
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com