The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of Maksons Textile (Pvt.) Limited

Rating Type Entity
(18-Mar-23 )
(18-Mar-22 )
Action Maintain Maintain
Long Term BBB- BBB-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Maksons Textile (Private) Limited (Maksons) is a private limited company incorporated in May 2000. The assigned ratings incorporate a comprehensive operating track record with a modest presence in the textile sector. Maksons Textile (Pvt.) Limited is a venture of a group of four family members who are shareholders of Al-Tariq Group. Maksons Textile is a modern weaving unit that manufactures greige fabric used for home textiles and outsources the processing for the finished goods. The Company’s sales mix is dominated by exports, where the topline clocked in at PKR 1.2bln in 1HFY23 (1HFY22: PKR 893mln). Net profitability declined to PKR 15mln in 1HFY23 (1HFY22: PKR 130mln) owing to high amounts of exchange loss and finance costs. Currently, the Company is operational at optimal capacity. The financial risk profile of the Company has displayed high leveraging and declining coverage. Going forward, improvement in the financial matrix remains essential. During 7MFY23, the textile exports were valued at $10.08bln compared to $10.93bln, reflecting an 8% decline YoY – the declining trend has been recorded in the last few months. The decline in exports is driven by attrition in the demand pattern of export avenues. The analysis of 5MFY23 reveals that 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. Moreover, a slowdown is prevailing in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The demand pattern is expected to improve post-Jun-23.
The ratings are dependent upon the management's ability to operate at an optimal level and improve profitability, margins, and coverage, which are considered essential. The governance framework of the company has room for improvement. At the same time, prudent management of short-term liquidity remains vital.

About the Entity
Maksons has a state-of-the-art weaving unit with an installed capacity of 114 weaving Airjet looms. Shareholding is held equally by four individuals. The Company belongs to Al-Tariq Group, specializing in engineering, having companies involved in construction, trading, textile and power generation. Maksons Textile’s Board comprises four members, all of our sponsors. The position of Chairman is held by Mr. Abdul Quddoos whereas Mr. Khalid Majeed is the CEO of the Company. The day-to-day operations are run by Director - Mr. Muhammad Khalid - whereas the Chairman assumes more of a monitoring role and also looks after the financial and banking issues.

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.