PACRA Maintains the Entity Ratings of Meko Fabrics (Pvt). Limited

The ratings of Meko Fabrics (Pvt.) Limited ("MFPL" or "the Company") are underpinned by the strengthened business profile of its sponsors and the established presence of the Mekotex Group ("the Group") in Pakistan's textile sector. A family-owned enterprise with an operational history spanning more than five decades, the Group has progressively expanded across the textile value chain — from upstream ginning operations to downstream value-added segments, primarily denim and home textiles. This vertically integrated structure generates meaningful operational synergies, enhances business sustainability, and supports resilience against industry cyclicality.

During 9MFY26, the Company acquired approximately 64,000 spindles along with related fixed assets from Mekotex (Pvt.) Limited as part of an ongoing restructuring process. In parallel, management broadened its presence in the value-added segment through the installation of automated embroidery machines, enabling the in-house execution of customer-specific embroidery requirements that had previously been outsourced. The Company's product portfolio comprises yarn, dyed fabric, printed fabric, and embroidered unstitched women's apparel. Over the review period, MFPL recorded a notable increase in business volumes, translating into a topline of PKR 3.9bln, while profitability indicators remained within a moderate range.

With a view to optimizing its overall cost structure, the Company has invested in renewable energy infrastructure, comprising a 17.5MW solar power facility and a 7.5MW wind energy project, both financed predominantly through equity. The wind turbine is expected to commence commercial operations by September 2026, at which point it is anticipated to contribute positively to the Company's cost competitiveness. Alongside these energy initiatives, management is actively pursuing the establishment of dyeing and printing facilities, which are expected to broaden the Company's value-added product offering and strengthen its positioning within the textile value chain.

MFPL continues to meet its working capital requirements through a combination of internally generated cash flows and short-term borrowings. Although the working capital cycle remained relatively stretched during the period under review, management anticipates a gradual improvement as operational efficiencies are realised and scale benefits progressively accrue. Further supporting the financial risk profile is management's stated intention to maintain a prudent capital structure — achieved through a disciplined financing strategy that limits reliance on conventional debt while accommodating future growth and expansion initiatives.
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The ratings are dependent upon the Company’s ability to reach its optimum capacity utilization. The key credit quality metrics of the Company will develop as the business grows. Adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings.

About the Entity
Meko Fabrics (Pvt). Limited (formerly Meko Textile Industries (Pvt). Limited) operates as a private limited Company, incorporated on February 17, 2023. It is a business venture of the Mekotex Group, owned by the Majeed Family. A majority stake of 75% is held by Mr. Khaild Majeed (the CEO), distributed equally (25% each) among himself and his two spouses. The remaining 25% stake is held by his brother, Mr. Shoaib Majeed. The Company has a sponsor-dominated board and the inclusion of an independent director would strengthen the governance framework of the Company.