PACRA Assigns Initial Entity Ratings to Nizami Feeds (Pvt.) Limited

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.

About the Entity
Nizami Feeds operates as a private limited company with shareholding vested with Mr. Mian Muhammad Ahmad Sethi (47%), Mr. Mian Muhammad Tayyab (42%) and Mr. Mian Muhammad Hamza Nizami (8%) (three brothers) holding their shares directly, while the remaining shareholding vests with Mr. Mian Muhammad Ammar Rehman (4%) and Mrs. Uzma Nizami (0.02%), Son and Wife of late Mr. Mian Muhammad Abdul Rehman, the fourth brother. The Company was incorporated in 2010 with it's primary business activity being import and trading of soybean meal, medical vaccines and poultry feed in the local market. In 2016 it set up it's manufacturing facility for production and sale of poultry and animal feed. Mr. Mian Muhammad Ahmad Sethi is the CEO and has over 12 years of experience in the poultry feed business and remains instrumental for all operations.