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PACRA Assigns Initial Entity Ratings to Hi-Tech Edible Oils (Private) Limited

Lahore, September 25, 2018 (PPI-OT): The ratings reflect long association of Hi-Tech Edible Oils with Hi-Tech Group; well known player of poultry industry. Hi-Tech is primarily operating in two segments 1) Edible Oil (well structured) and, 2) Poultry Feeds (fragmented). Company’s turnover increased during past few years, owing to the plant expansion in two phases. Although, margins remained on the lower side due to risk related to the price fluctuation depending upon the demand supply gap. Higher costs are majorly related to raw material procurement, which is being imported. Currently, the company is locally selling both edible oil and poultry meal. However, some export avenues may be explored by management in future. Going Forward, company’s sales are expected to improve owing to increased installed capacity. Inventory management system and related efficiencies would require attention which are being effected by the long lead time. Being an importer of oil seeds (Soybean) in Pakistan, there is an inherent risk involved of currency fluctuations and prices of product, left open to market forces. Financial risk profile of the company is characterised by leveraging due to high short term borrowing related to working capital.

The ratings are dependent on relative positioning of the company and its ability to prudently manage the liquidity and debt profile of the company, particularity working capital, while improving business margins. The company plans no long term debt. Effective changes in governance framework would be good for ratings.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com