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The Pakistan Credit Rating Agency Limited

Date
29-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Muhammad Hassan
muhammad.hassan@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Corporate Rating Methodology (Jul 17) [View]
  • Correlation between long-term and short-term rating scale (Jun 17) [View]

Related Research

  • Sector Study | Textile (Oct 17) [View]
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PACRA Assigns Initial Entity Ratings to M.Y. Bari Mills (Pvt.) Limited
 Rating Type Entity
Current
(29-Dec-2017)
 Action Initial
 Long Term BB+
 Short Term A3
 Outlook Stable
 Rating Watch -

The ratings of M.Y. Bari Mills (Pvt.) Limited (Bari Mills) reflect small yet growing business profile. Bari Mills is a family owned small scale private company owned by a seasoned business family of Karachi. The company is primarily an export oriented, towel manufacturing concern. Bari Mills is in the process of expanding its manufacturing facilities which is proving key driver in increase in revenues (44% increase in FY17). Textile industry overall is witnessing suppressed margins due to international lower commodity price and higher cost of doing business in Pakistan. However, towel and denim industry continues to surge forward on the back of Pakistan’s cotton which is more suitable for coarse counts yarn. Towel industry continues to give good margins which is reflected in Bari Mills profitability. On standalone basis, the company’s concentration levels – both customer and geographical – are significantly high with majority of company revenues (~73%) emanates from a single customer. However, the ratings draw comfort from the Bari group's overall customer base. Financial risk of the company needs better management which is reflected highly leveraged capital structure though, coverages remain strong. Going forward, in absence of any further debt-driven expansion in the medium-term, financial profile is expected to become strong. The ratings further incorporate the young management team and the family’s long association with textile sector.

The ratings are dependent on sustaining business margins while maintaining financial risk at low level. Meanwhile, strengthening of governance framework for better oversight of strategic affairs is considered essential.
About the Entity
M.Y. Bari Mills (Pvt.) Limited (Bari Mills), incorporated in 2012, is engaged in manufacturing and marketing of different varieties of towel. The company operates with two units providing stitching, weaving and processing facilities. Bari Mills is a family owned business owned by Mr. Haroon Bari (20% shareholding) and his five sons (16% shareholding each).

Overall control vests with five members BoD. All directors represent Bari Family Group. Mr. Haroon Bari, the Chairman, carries with him over four decades of experience in textile sector. He is supported by all his sons, while, Mr. Nabeel Haroon Bari – eldest son being the CEO of Bari Mills, leads the management team.
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.
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