PACRA Assigns Preliminary Ratings to Beacon Impex (Pvt.) Limited PKR-1bln Sukuk | TBI

The assigned rating of Beacon Impex Pvt. Limited (“the Company” or “Beacon Impex”) emanates from the prominent profile of the Company in the textile industry of Pakistan and cementing its reputation as a trailblazer under the category of dedicated bodywear segment. Beacon Impex is a full vertically integrated textile Knitwear Company and possesses in-house facilities for the textile product value chain which includes spinning, Knitting, Elastic, Dyeing/processing, Cutting & Garments. Bodywear garments are the Company's prime business vertical, with boxers and briefs holding an apex position in the valuation matrix. As of FY24, Puma is Beacon Impex's top client in terms of business contribution, followed by Hugo Boss, Levi’s, and Amazon. The presence of stable and renowned brands as top clients augments the Company's sustainability profile. The Company's top line grew by 29.5% in 1HFY25, reaching PKR 23,479mln (FY24: PKR 36,274mln), primarily driven by improved business volumes. Beacon Impex is an export-oriented company, as evidenced by its sales mix, with Europe being its primary export destination. The Company's gross margins have declined, primarily due to raw material prices, inflation, wages increase, and steady USD conversion rate. . The Company has successfully installed an 8.259-megawatt solar power plant, financed under SBP's renewable energy scheme, at a cost of PKR 850mln to manage energy costs. The commercialization of the PET Recycled Polyester Fiber Plant is in its advanced stages, with a planned production capacity of 60 tons per day, of which 48 tons per day will be used in-house, while the remaining will be available for commercial sale. The company's financial risk profile is considered good, supported by optimal working capital management. Despite a dilution in operating profit, cash flows remain sufficient with moderate coverage. The company's net working capital requirements are primarily met through short-term borrowings (STB), along with internally generated cash flows. Lately, the Company has decided to supplement its working capital requirements by way of issuance commercial paper. Beacon Impex maintains a leveraged capital structure, with approximately 58.0% of its debt comprising STB, while the remaining primarily consists of long-term conventional loans used to fund CAPEX in the textile value chain over the years
The underlying instrument is secured by a ranking charge over the Company’s current assets. The Issuer must maintain a Debt Payment Account (DPA) under the lien of the Investment Agent. Payments will begin 60 days before maturity and continue fortnightly to ensure the full issue amount is available in the DPA five days before maturity. Principal repayment will be made in a bullet payment and profit will be paid quarterly.

About the Entity
Beacon Impex commenced operations in 2005. The majority shareholding lies with the Company's CEO, Mr. Muhammad Shakeel Faridi, the director Mr. Mudassar Zafar, and other sponsors. The Board comprises two BoDs including the CEO.

About the Instrument
Beacon Impex is set to issue Rated, Secured, Privately Placed, Short-Term Sukuk, carrying a markup of 3MK+1.50%-2.00% with a tenor of 09 months. The purpose of the instrument is to finance the working capital requirements of the Company.