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-24 )
(27-Jan-23 )
Action Maintain Maintain
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, MekoDenim, 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, steadily improved 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 plans further penetration in the USA/ Canada market in the upcoming years. The majority of the sales revenue for the Company comes from export sales, which account for 98% of total sales revenue. During FY23, the top line recorded at PKR 8.8bln (FY22: PKR 10.9bln). Despite grappling with inflationary pressures, the company managed to absorb and subsequently pass on these cost burdens. Consequently, there was a growth in margins. Going forward, given the export market depicting a recessionary trend, volumetric offtakes are forecasted to stay under pressure while the management expects the sales number to stay intact. The company is gradually integrating into Mekodenims, with a significant portion of sales having already shifted there during FY23. The completion of this process is anticipated in the near future. The liquidity profile of the company is considered adequate in relation to outstanding obligations.
During FY23, textile exports were valued at $16.5 billion as against $19.33 billion, reflecting a 15% year-on-year decline – a downward trend seen since the beginning of FY23. Exports declined due to higher energy prices, cotton shortages, and uncertainty in foreign exchange rates. Taming the demand represented by export routes was also a challenge. During FY23, value-added products such as knitwear, bedwear, towels, and ready-made garments saw an annual decline of 13 percent. Basic textiles, including raw cotton, cotton yarn, and cotton fabrics, declined by 21 percent year-on-year. During the month of June 2023, cotton yarn exports increased by 7% MoM. Value-added exports reported volume growth of 16 percent on a month-on-month basis.
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 se One of the largest home textile exporters from Pakistan, and a leading supplier to top impa orders & retailers, by providing the complete home solutions the end consumers. Mr. Shoaib Majeed is the owner of the Company. He has twenty-five years of professional experience and graduated in Business Administration. Mr. Rayyan Ahmed Ashraf - the CEO - has seven years of experience. He is a Bachelor of Arts (Honors).

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.