Meskay and Femtee Trading Co. Sees Revenue Surge Despite Profit Margin Decline

Karachi: The Pakistan Credit Rating Agency (PACRA) has upheld the entity ratings of Meskay and Femtee Trading Company (Pvt.) Ltd., a key player in the rice export sector. The decision reflects the company’s notable standing in the national market, backed by a varied product lineup and comprehensive production capabilities.

Meskay and Femtee Trading Company benefits from experienced leadership with international business expertise, contributing to its strong governance and effective management practices. This foundation has facilitated continuous financial growth, evidenced by a 147% rise in topline revenue for fiscal year 2024.

This revenue growth was largely driven by record rice production, a recovery aided by favorable flood conditions in fiscal year 2023. However, the company is facing challenges in the first half of fiscal year 2025 due to climatic changes and diminished rainfall, impacting production levels.

Despite the revenue increase, Meskay’s profit margins have declined. The gross profit margin contracted by 36%, attributed to elevated raw material costs, while operating profits were impacted by inflation. Consequently, the net profit margin fell by 75% in fiscal year 2024, primarily due to heightened finance costs.

The company’s financial risk profile remains robust, supported by a strong capital structure, effective working capital management, and solid debt service coverage. The rice sector, a vital component of Pakistan’s agriculture, saw production surge by approximately 35% in fiscal year 2024, driven by global demand and India’s temporary export ban.

Basmati rice exports increased from $650 million to $876 million, while non-basmati rice exports rose from $1,498 million to $3,054 million. The company’s future ratings depend on maintaining business volumes amid a challenging global economic environment and ensuring a stable financial risk profile with a focus on working capital management.