PACRA Maintains Entity Ratings of Interwood Mobel (Private) Limited

Interwood Mobel (Private) Limited (‘Interwood Mobel’ or ‘the Company’) is engaged in the manufacturing & sale of a wide range of home, offices, kitchens, doors, wardrobes, flooring, accessories and bespoke furniture. The ratings reflect the Company’s strong brand equity and long-established presence in Pakistan’s furniture and fixture industry. High competition subsists in the domestic market driven by unstructured and unregulated players, while organized segments primarily target high-end customers. Interwood Mobel procures safe and good quality imported wood to secure reliability and durability of its furniture. From wood seasoning and processing, to robotic painting, polishing, crafting and finishing, the Company’s factory is a marvel of innovation & technology to achieve mass production capability, operational efficiency and reduce overheads. The Company has been successful in evolving its business portfolio and enjoys a healthy mix between retail and corporate sales. The assigned ratings reflect the Company’s state-of-the-art facilities, national footprint, brand value, and large-scale projects. Interwood Mobel’s performance is closely tied to the real estate sector, given its significant corporate clientele. In FY24, local furniture market demand declined, primarily due to a downturn in the real estate sector. This was driven by challenging conditions in the construction, steel, and cement industries, alongside uncertain foreign exchange reserves, higher policy interest rates to curb inflation, and reduced purchasing power. As a result, the Company’s topline witnessed modest growth of ~2.4% in FY24, primarily due to price inflation. Consequently, margins improved; however, profit before tax (PBT) declined due to increased finance costs. The improvement in net profit margins was mainly due to favorable tax adjustments, which offset some of the negative impacts of the increased finance costs. However, the Company’s diverse segment mix and extensive product line position it well for a competitive edge. Looking ahead, management is diligently working to enhance revenues and margins by securing new contracts. The Company’s financial risk profile is considered adequate, marked by modest coverages, an adequate working capital cycle, and satisfactory cash flows. The capital structure is moderately leveraged, mainly comprising short-term borrowings (STBs). With a highly experienced management team and strong internal controls, the Company has implemented effective risk mitigation measures. However, implementation of good governance structure is required to ensure compliance at all levels and smooth running of operations.
The ratings are dependent on the Company’s ability to sustain its industry-leading position while consistently growing in a dynamic business environment. Sustained revenue growth, robust profit margins, and prudent financial performance as depicted in Company’s financial projections shall remain imperative. Meanwhile, enhancing the financial profile through effective working capital management and strong coverage ratios will be crucial.

About the Entity
Interwood Mobel (Private) Limited, founded by Mr. Farooq Ahmed Malik in 1974, has over four decades of experience in manufacturing and selling furniture and allied items. The Company operates through five retail outlets in Karachi (1), Lahore (2), and Islamabad (2), with additional dealer networks in other cities. Major shareholding (~99.9%) lies with the Farooq Family: Mr. Farooq Ahmed Malik and Mrs. Ghazala Farooq own ~17% and ~16%, respectively, while their sons, Mr. Omar Farooq and Mr. Ali Farooq, each own ~33%. The remaining ~0.1% is held by close relatives. The Company is led by the CEO Mr. Omar Farooq, supported by a professional management team.