Qadir Agro Industries (Pvt.) Limited

RATING REPORT | Mar-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
26-Mar-26 BB+ A3 Stable Maintain -
27-Mar-25 BB+ A3 Stable Maintain -
27-Mar-24 BB+ A3 Stable Maintain -
27-Mar-23 BB+ A3 Stable Maintain -
18-Mar-22 BB+ A3 Stable Initial -
About the Entity

Qadir Agro Industries (Pvt.) Limited (‘the Company’) was incorporated in August 2007 as a Private Limited Company. The Company is primarily engaged in the process of seed filtering, crushing and solvent extraction. The Company primarily sells soybean oil/meal, canola oil/meal and poultry feed. The Company has seed crushing capacity of 250MT per day. The capacity of the poultry feed mill, currently, stands at 30MT per hour. The Company’s major ownership resides with Khawaja Mehr Baksh (~34%) and his sons, Khawaja Muhammad Shehzad (~33%) and Khawaja Muhammad Omer (~33%). Mr. Mehr Baksh is the Chairman of the Board, while Mr. Muhammad Shehzad serves as the CEO of the Company.

Rating Rationale

The assigned ratings to Qadir Agro Industries (Pvt.) Limited (“the Company”) reflect its established presence in the edible oil extraction and poultry feed industry, supported by the sponsors’ extensive experience and a stable, family-owned ownership structure. The Company, with origins in the 1980s and incorporation in 2007, operates a seed crushing facility and a poultry feed mill in Multan, producing soybean and canola oil and meal along with poultry feed. Ownership remains concentrated within the founding family, namely Mr. Khawaja Mehr Baksh and his sons, Mr. Khawaja Muhammad Shehzad and Mr. Khawaja Muhammad Omer, ensuring continuity in strategic direction, while the sponsors also maintain diversified business interests, including Roomi Industries (Pvt.) Limited. Governance is characterized by a three-member Board comprising only family members, while management operates through a centralized structure with key functional heads reporting directly to top management; although supported by a locally developed ERP system, the internal audit function remains underdeveloped, indicating room for improvement in internal controls and oversight. In FY25, the Company’s revenue declined sharply to ~PKR 2.9 billion from ~PKR 5.3 billion in FY24, primarily due to a contraction in the edible oil segment following the ban on GMO seed imports, which constitute a critical raw material; however, the poultry feed segment continued to provide relative stability to the revenue base, and with the resumption of GMO seed imports, a recovery in sales is expected over the near term. Profitability remained constrained amid lower revenues and relatively elevated operating costs, while working capital requirements, driven by raw material imports and higher inventory levels, were supported by supplier credit. Notwithstanding the topline pressure, the Company’s financial risk profile improved significantly on account of substantial deleveraging, with leverage declining to ~1.2% from ~11.8% in FY24, accompanied by a notable strengthening in coverage indicators.

Key Rating Drivers

The ratings are dependent on the management's ability to prudently improve margins, profitability, and overall financial profile of the Company. Meanwhile, strengthening governance practices will have a positive impact on the ratings. Any deterioration in debt coverages leading to higher financial risk or substantial losses will adversely impact the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Qadir Agro Industries (Pvt.) Limited


Rating Analysis

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Profile
Legal Structure

Qadir Agro Industries (Pvt.) Limited (“the Company”) was incorporated in August 2007 as a Private Limited Company. The Company’s principal business is the extraction of oil and related by-products from cottonseed, sunflower seeds, canola, soybean, mustard, and castor peanuts. Its registered office is located in Multan.


Background

Mr. Khawaja Mehr Baksh and his son, Mr. Khawaja Muhammad Shehzad, laid the foundations of the Company by establishing a small crushing unit in the 1980s. Over the years, the Company has expanded its capacity and diversified into the poultry feed sector with the establishment of a feed mill in July 2018.


Operations

The Company specializes in seed cleaning, crushing, and solvent extraction. Its core products include soybean oil and meal, canola oil and meal, and poultry feed. The seed crushing facility has a capacity of 250 metric tons per day, while the poultry feed mill operates at a capacity of 15 metric tons per hour. The manufacturing unit is strategically located in Multan, enhancing accessibility and supply chain efficiency.


Ownership
Ownership Structure

The Company’s major ownership is held by Khawaja Mehr Baksh (~34%) and his sons, Khawaja Muhammad Shehzad (~33%) and Khawaja Muhammad Omer (~33%).


Stability

The Company benefits from a stable ownership structure, being entirely held by the founding family, which provides continuity in strategic direction and decision-making.


Business Acumen

The sponsors have extensive business experience across the textile, edible oil, and poultry feed sectors. They expanded into textiles through the acquisition of a cotton factory and also own Roomi Industries (Pvt.) Limited, a solvent extraction unit, demonstrating their entrepreneurial expertise and diversified business interests.


Financial Strength

The sponsors possess sufficient net worth to provide financial support to the Company during periods of distress, underpinning its overall financial resilience.


Governance
Board Structure

The Company’s Board of Directors consists of three Executive Directors, all of whom are members of the sponsoring family. The absence of independent directors and limited diversity highlight potential areas for improvement in corporate governance. Overall control of the Company rests with the Board Chairman.


Members’ Profile

The Company’s leadership combines long-standing experience with academic qualifications. The Board Chairman, Mr. Khawaja Mehr Baksh, a graduate, has been associated with the Company since 1987 and brings over 50 years of experience across the textile, edible oil, and poultry feed sectors. The CEO, Mr. Khawaja Muhammad Shehzad, holds an MBA and has over 30 years of relevant industry experience, while Mr. Khawaja Muhammad Omer, also an MBA, has over 20 years of experience in the sector.


Board Effectiveness

The Board currently does not have formal sub-committees. However, the minutes of Board meetings are properly documented, ensuring a clear record of deliberations and decisions.


Financial Transparency

The Company’s financial statements for the year ended June 2025 were audited by Waqas & Co. Chartered Accountants, who issued an unqualified opinion. Although the firm is QCR-rated, it is not included on the State Bank of Pakistan’s panel of approved auditors.


Management
Organizational Structure

The Company follows a linear organizational structure, operating through three main functions: Production, Finance, and Sales & Marketing. All functional managers report directly to the CEO, who is responsible for making all key decisions and overseeing the overall operations of the Company.


Management Team

Mr. Khawaja Muhammad Shehzad, the CEO of the Company, brings over 30 years of experience in the edible oil and textile sectors. An MBA by qualification, he also oversees the Company’s procurement and import of edible oil seeds, ensuring operational efficiency and strategic sourcing.


Effectiveness

The Company does not have formal management committees. However, the management meets on an as-needed basis to oversee operations and ensure the efficiency of the Company’s activities.


MIS

A locally developed ERP system, “ERP Expert” has been implemented by the Company to support operational and financial reporting functions.


Control Environment

The Company’s internal audit function is currently underdeveloped, limiting systematic monitoring of operational and financial controls. Strengthening this function would improve oversight, risk management, and the reliability of internal processes.


Business Risk
Industry Dynamics

During 9MFY25, edible oil consumption stood at ~3.2 million MT, down from ~4.2 million MT in FY24, while global prices showed a mixed trend, rising in the first quarter of 1HCY25 before easing in the second, with palm oil averaging ~USD 1,007/MT and soybean oil ~USD 1,097/MT. Domestic prices mirrored these movements, remaining elevated initially and moderating later, averaging ~PKR 541/kg. Imports accounted for ~6.6% of total imports (SPLY: ~5.5%), supported by exchange rate stability. Sector revenues posted a modest year-on-year increase, underpinned by moderate consumption growth and population expansion. While gross and operating margins improved due to better pricing and cost management, net margins remained under pressure. Looking ahead, a stabilizing PKR, easing inflation, and improving macroeconomic conditions are expected to support performance, though the sector’s reliance on imported palm oil highlights the need to develop local oilseed production.


Relative Position

The Company holds a relatively small position in the edible oil segment, with a market share of less than 1% in terms of both revenue and production.


Revenues

During FY25, the Company’s revenue was primarily driven by poultry feed sales, which accounted for ~91% of total revenue, followed by rapeseed oil (~6%) and soybean oil (~3%). Total sales amounted to ~PKR 2,906 million, declining from ~PKR 5,322 million in FY24, indicating a significant year-on-year contraction. Revenue remains geographically concentrated in the central region of Pakistan, highlighting limited market diversification and potential exposure to regional demand fluctuations.


Margins

During FY25, the Company’s gross profit margin stood at ~3.9%, slightly down from ~4% in FY24. Operating profit margin declined more noticeably to ~2% (FY24: ~3.1%), reflecting higher operating expenses relative to revenue. Net profit margin also decreased marginally to ~1.1% (FY24: ~1.3%). The contraction across profitability metrics underscores pressure on margins, primarily due to reduced sales and limited pricing flexibility in a highly competitive market.


Sustainability

The Company’s revenue and profitability profile highlights challenges in maintaining growth under its current business model. With a market share of less than 1% in the edible oil segment and revenue heavily reliant on poultry feed, the Company is exposed to demand fluctuations within a geographically concentrated market. Enhancing long-term sustainability will require strategic diversification of both product offerings and geographic presence, alongside measures to improve operational efficiency and cost management.


Financial Risk
Working capital

The Company’s working capital is primarily driven by raw material imports, with buffer stock maintained for 6–8 months. Inventory days increased to ~88 in FY25 (FY24: ~40), while trade receivable days remained stable at ~8. Trade payables rose sharply to ~PKR 1,242 million in FY25 from ~PKR 678 million in FY24, resulting in negative net working capital of ~25 days (FY24: ~+20). This indicates that operations are largely financed through supplier credit, supporting short-term liquidity but highlighting reliance on creditor funding for operational continuity.


Coverages

The Company’s coverage metrics improved significantly in FY25, primarily due to reduced finance costs following substantial deleveraging. The interest coverage ratio surged to ~313x in FY25, compared to ~4.1x in FY24, reflecting a markedly lower debt servicing burden. Similarly, the ratio of free cash flow to finance cost (FCFO/Finance Cost) strengthened to ~177.4x in FY25 from ~3x in FY24, underscoring enhanced capacity to meet financial obligations from operating cash flows. The improvement in coverage indicators demonstrates strengthened financial flexibility and reduced vulnerability to interest rate fluctuations.


Capitalization

As of FY25, the Company’s leverage remained minimal at ~1.2%, reflecting a largely equity-funded capital structure. The Company’s borrowings are limited to short-term facilities amounting to ~PKR 8 million. Shareholders’ equity increased to ~PKR 655 million in FY25 (FY24: ~PKR 622 million), supported by retained earnings. The low leverage profile provides financial stability and headroom to raise debt, if required, to support future growth initiatives.
 
 

Mar-26

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Qadir Agro Industries (Pvt.) Limited


Financial Summary

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(PKR mln)


 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
A. BALANCE SHEET
1. Non-Current Assets 444 471 458
2. Investments 0 0 0
3. Related Party Exposure 0 0 0
4. Current Assets 1,551 938 1,161
a. Inventories 948 451 727
b. Trade Receivables 121 6 221
5. Total Assets 1,995 1,409 1,619
6. Current Liabilities 1,291 742 257
a. Trade Payables 1,242 678 144
7. Borrowings 8 0 758
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 41 45 47
10. Net Assets 655 622 556
11. Shareholders' Equity 655 622 556
B. INCOME STATEMENT
1. Sales 2,906 5,322 5,626
a. Cost of Good Sold (2,794) (5,108) (5,398)
2. Gross Profit 112 214 228
a. Operating Expenses (54) (52) (51)
3. Operating Profit 59 162 177
a. Non Operating Income or (Expense) (4) (8) (7)
4. Profit or (Loss) before Interest and Tax 55 155 170
a. Total Finance Cost (1) (49) (74)
b. Taxation (21) (36) (90)
6. Net Income Or (Loss) 33 69 6
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 54 146 161
b. Net Cash from Operating Activities before Working Capital Changes 54 97 86
c. Changes in Working Capital (118) 9 (8)
1. Net Cash provided by Operating Activities (65) 106 79
2. Net Cash (Used in) or Available From Investing Activities (13) (58) (39)
3. Net Cash (Used in) or Available From Financing Activities 8 0 0
4. Net Cash generated or (Used) during the period (70) 48 40
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -45.4% -5.4% 35.7%
b. Gross Profit Margin 3.9% 4.0% 4.1%
c. Net Profit Margin 1.1% 1.3% 0.1%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -2.2% 2.9% 2.7%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 5.1% 11.8% 1.2%
2. Working Capital Management
a. Gross Working Capital (Average Days) 96 48 77
b. Net Working Capital (Average Days) -25 20 70
c. Current Ratio (Current Assets / Current Liabilities) 1.2 1.3 4.5
3. Coverages
a. EBITDA / Finance Cost 313.0 4.1 2.9
b. FCFO / Finance Cost+CMLTB+Excess STB 177.4 3.0 2.2
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.0 0.0 0.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 1.2% 0.0% 57.7%
b. Interest or Markup Payable (Days) 0.0 0.0 0.0
c. Entity Average Borrowing Rate 3.8% 6.5% 7.0%

Mar-26

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Qadir Agro Industries (Pvt.) Limited


Rating Scale

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Mar-26

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Qadir Agro Industries (Pvt.) Limited


regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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  3. Conduct of Business
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Mar-26

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