PACRA Maintains Entity Ratings of 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 and Layer Feed in central region. The Company has a relatively small top-line in comparison to it's peers. however, 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. Lately, the Company built raw material inventory in anticipation of higher prices. Average debtors days increased leading to stretched working capital requirement that are met through short-term borrowings. Nizami Feed's has a moderately leveraged capital structure and healthy coverages. The leveraging may rise further 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 remains critical. Any significant deterioration in margins and/or coverage's will have negative impact on the ratings.

About the Entity
Nizami Feeds (Pvt.) Limited ventured in the import and trade of soybean meal, medical vaccines and poultry feed in local market only, in 2006 as a partnership. In 2010, the partnership was registered as a Private limited Company. Later, in 2016 the Company started to produce poultry feed. Currently, the Company deals in both poultry and animal feed, with poultry feed being the primary focus. Six poultry feed variants are produced, with broiler and layer feed as main poultry feed products. Wanda is the sole product under animal feed. The production plant has an installed capacity of 131,400 MT per annum or 50 MT per hour. Nizami Feed's head office is situated in Lahore, while the production plant is located in Sheikhupura.

The Company's shareholding vests with the sponsoring family. Mr. Mian Muhammad Ahmad Sethi, Mr. Mian Muhammad Tayyab and Mr. Mian Muhammad Hamza Nizami (brothers) own 47%, 42% and 8% shares of Nizami Feeds, respectively. While, the remaining shareholding resides with the family members of late Mr. Mian Muhammad Abdul Rehman (4%). Board's Chairman and the Company's CEO, Mr. Mian M. Ahmad Sethi, is assisted by a team of experienced professionals.