The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Assigns Entity Ratings to Be Be Jan Pakistan Limited

Rating Type Entity
(09-Dec-22 )
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

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 workwear 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 & 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.

About the Entity
Be Be Jan Pakistan Limited (‘Be Be Jan’ or ‘The Company’) was incorporated in Punjab, Pakistan as a Private Limited Company on November 19, 1978 under the Companies Ordinance, 1984 (Now the Companies Act, 2017) and was converted into a Public (unlisted) Limited Company with effect from November 08, 2001. The principal business of the Company is the manufacturing and export of fabric and made-ups. The Company operates a single weaving unit with 140 looms. The Company has also two wraping machines and one sizing machine. The ownership of the Company rests with the family of Mr. Usman including his mother, brother, and sisters. The major shareholding of the Company is owned by Mr. Usman Ehsan Elahi (58%), Mrs. Aisha Saqib (23%), Mr. Faisal Ehsan Elahi (09%), Ms. Marriam Saqib (2%), Mrs. Sonia Umer (2%) & Mrs. Fareeha Faisal (2%). While the rest is with Be Be Jan Protein Farms (Pvt.) Ltd. The Company has three-member board with the presence of sponsors and their families. The position of CEO is vested with Mrs. Aisha Saqib.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.