The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Maintains Entity Ratings of KAM International

Rating Type Entity
(27-Jan-23 )
(27-Jan-22 )
Action Maintain Initial
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

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, & 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, bedwear 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.

About the Entity
KAM International was incorporated on August 7, 1996 as a single-member company. The Company has a highly integrated network of ginning, spinning, weaving, printing, dyeing, finishing, cutting & stitching units under their own setup. One of the largest home textile exporters from Pakistan, and leading supplier to top importers & retailers, by providing the complete home solutions to the end consumers. Mr. Shoaib Majeed is the owner of the Company. He carries twenty-five years of professional experience and graduated in Business Administration. After the death of Mr. Mohammad Ashraf, Mr. Rayyan Ahmed Ashraf, who was looking after the firm as Director Operations, has now taken over the role of CEO. Overall management control is in the hands of the CEO. He is Bachelor of Arts (Honors) and has 6 years of experience.

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.