PACRA Assigns Initial Entity Ratings to Beacon Impex (Pvt.) Limited

The assigned rating of Beacon Impex Pvt. Limited (“the Company” or “BIPL”) emanates from the prominent profile of the Company in the textile industry of Pakistan and cementing its reputation as a trailblazer under the category of dedicated bodywear segment. BIPL is a full vertically integrated textile Knitwear Company and possesses in-house facilities for the textile product value chain which includes spinning, Knitting, Elastic, Dyeing/processing, Cutting & Garments. The Company has the latest state-of-the-art machinery and manufacturing facility meeting high-end international standards with 100% textile value chain process automation and a congenial labour working environment. The Company has built an automated and centrally-integrated KPIs-based assessment dashboard system to analyze real-time facility performance and address process inefficiencies. The execution of RFID and barcode-based backtrack systems has enabled the Company to access final product traceability via a single scan which escalates the control environment of the Company. The product slate of the Company primarily vested in bodywear garments followed by the sale of fabric, denim and yarn. The top line of the Company has shown a compound annual growth of 28% during three years and stood at PKR 29.4bln as of FY23 (6MFY24: PKR 17.8bln) mainly dominated by exports of garments. The import substitution of elastic via in-house manufacturing is considered a game-changer for BIPL as it creates a cushion in the cost of production and supplements in terms of price competitiveness. However, price inflation on local raw cotton, soaring energy costs/ operating expenses and elevated finance costs have slightly impacted the margins and profitability matrix of the Company over the years. The clientele of BIPL is embraced by established entities located across various export destinations worldwide, predominately in the European market which has augmented the business sustainability as management of the Company is mindful to keep align their financial performance with financial projections. The execution of CAPEX for solar installation is under consideration to manage energy cost risk. The Company has a sponsor-dominated board with adequate size and board members possess considerable industry-specific exposure and act more in an execution role supported by a team of seasoned and professional management. The Financial risk profile of the Company is considered good with optimal working capital management. The cash flows of the Company are viewed as sufficient as the working capital requirements are met through an optimal mix of internally generated cash flows and short-term borrowings. The coverages of the Company are considered comfortable with a leveraged capital structure.
The ratings are dependent on the Company's ability to sustain its business profile while maintaining its profitability matrix at an optimal level. The sustainability of margins and improvement in coverages while expanding business volumes remain critical. The compliance with corporate governance will be further strengthened by the inclusion of an independent oversight function. Adherence to the debt matrix at a moderate level is a prerequisite for assigned ratings

About the Entity
BIPL commenced operations in 2005. The majority shareholding lies with the Company's CEO, Mr. Muhammad Shakeel Faridi, the director Mr. Mudassar Zafar, and other sponsors. The Company has produced ~ six mln garments per month and knitted products. The Board comprises two BoDs including the CEO, Mr. Muhammad Shakeel Faridi, and Mr. Mudassar Zafar.