Lahore, March 22, 2018 (PPI-OT): Poultry is one of the largest agro based segment in Pakistan, accounting both domestic and commercial poultry. With a turnover of almost PKR 500 billion in FY17, industry had an annual growth of 10%. Pakistan is very well sufficient in poultry meat and egg production. However, lacks in per capita protein consumption.
The ratings reflect Sadiq Poultry’s association with an established vertically integrated poultry group, named SB Group. The company enjoys established profile in its business – broiler, chicken, eggs and day old chicks. It is a leading player in these segments with growing revenues. However, significant expansion in capacities in recent period has kept margins under check. The management is cognizant of this and its near-term strategy is focused on consolidation.
This includes increased focus on eggs and broiler business post settlement of assets amongst family and introduction of efficiency in operations-like use of caged broiler breeding technology. Nevertheless, the company remains exposed to volatility in demand pattern and contingent health risk to its products. Procuring feed in bulk from group’s own company would manage related risks. Company’s financial risk profile is characterized by moderate leverage. Loan mix, -long and short term- though adequate is planned to be improved further.
The ratings are dependent on the management’s ability to prudently mange the business risk typical to short cycle because of perishable consumer products, while sustaining business margins. Moreover, governance framework needs attention.
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
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