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Lahore, April 19, 2019 (PPI-OT): The global feed industry can be valued at around ~$460bln, with poultry (~$166bln) constituting ~36% of the total industry. Pakistan produces ~8mln MT of feed annually with a total of ~150 registered feed mills, and ~200 unregistered feed mills catering to it.
The ratings reflect Nizami Feeds developing business profile in the Poultry Feed Industry. The Company entered feed manufacturing business in 2016 and is primarily engaged in sales of Broiler Feed and Broiler Layer Feed in central region. The Company has a relatively small top-line in comparison to it’s peers however, has sustained healthy margins on the back of controlled input costs and quality product. The Company remains exposed to inherent risks in the feed industry emanating from raw material price changes and potential hazards to flocks.
The Company procures raw materials on cash throughout the period keeping it’s working capital in check, however, higher than average debtors days increases it’s reliance on external finance which are met through short-term borrowings. Nizami Feed’s financial profile is characterized by a moderately leveraged capital structure and healthy coverages. The leveraging may rise with increase in operations to meet working capital requirements.
The ratings are dependent on the management’s ability to increase its top-line, sustain margins, and enhance profitability. Maintaining strict working capital discipline and ensuing borrowings, while strengthening of governance framework remains critical. Any significant deterioration in margins and/or coverage’s will have an impact on the 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