PACRA Upgrades Entity Ratings of M.Y. Bari Mills (Pvt.) Limited

The ratings of M.Y. Bari Mills Pvt. Ltd ("M.Y. Bari" or "the Company") reflect a strong business profile, underscored by the extensive experience of its sponsoring family. The Company ranks among the top 10 towel exporters in the country, highlighting its prominent standing. Its manufacturing facility is equipped with modern machinery to effectively meet the demands of global clientele. The Company's major export destinations include the USA and Europe, and it continually expanding its customer base to mitigate risks associated with customer concentration. During 11MFY24, textile exports showed a volumetric increase of ~23%, signaling a positive trend for the industry. However, in terms of value, the increase was minimal at ~1.4%, amounting to $15,241mln. Towel exports constituted ~6% of total textile exports, with their contribution remaining unchanged. Corresponding with the overall volume growth in textiles, towel exports also saw a rise of about 15.4% (205KMT). Nevertheless, the average unit price slipped to $4.17 from $5.14 SPLY. The local industry's margins have faced sustained pressure due to adverse macroeconomic conditions and a significant rise in energy tariffs, potentially dampening the growth trajectory. During 9MFY24, M.Y. Bari's revenues surged by ~39.2%, driven largely by a significant increase in export volumes. However, the average selling price remained under pressure, reflecting an industry-wide trend. Gross and operating margins also improved to 17% and 11% (FY23: 15% and 7.8%). Net margin posted a little dilution and stood at 6.9% (FY23: 8%) due to absence of FX gain and higher finance cost. Moving forward, the company is actively pursuing capacity expansion across all segments i.e. dyeing, weaving, and printing with plans to finance these initiatives through internally generated cashflows. The management holds a very conservative stance on borrowings, as reflected in the financial projections. The Financial risk profile is characterized by comfortable cashflows, coverages, and working capital cycle. Capital structure is leveraged with a mix of long-term and short-term borrowings (availed at concessionary rates from SBP (LTFF & ERF).
The ratings are dependent on maintaining optimal operations with sustained growth in revenue and margins, while maintaining financial risk at a low level is critical. Meanwhile, strengthening the governance framework and control environment for better oversight of strategic affairs is essential for ratings.

About the Entity
M.Y. Bari Mills (Pvt.) Limited was incorporated in 2012 as a private limited company. Primary business of the Company is to manufacture and export towels with a total installed capacity of 190 looms. Mr. Haroon Bari owns ~20% of shares and the remaining shareholding is evenly distributed among his five sons (~16% each). The BoD comprises five members with Mr. Haroon Bari as Chairman, who is having an experience of ~51 years in textile industry. The CEO of the Company is Mr. Nabeel Haroon Bari, a graduate from UK in the field of commerce with overall working experience of ~24 years with the group. There is no independent director on the board.