Meskay & Femtee Trading Company (Pvt.) Limited (‘Meskay’ or ‘the Company’) was incorporated in February 2006 as a private limited company under the Companies Ordinance, 1984 (now the Companies Act, 2017).

The sponsors commenced grain trading in the 1990s as sole proprietors. In 1998, Mr. Shahid Tawawala joined the business, leading to the establishment of a partnership firm, Meskay & Femtee. In 2006, Mr. Shahid separated his business and incorporated it as Meskay & Femtee Trading Company (Pvt.) Limited. Initially operating through rented processing plants and warehouses, the Company gradually acquired its own facilities. Over the years, continuous capacity expansion and the installation of modern machinery have strengthened its position, making it a prominent player in the country’s rice export sector. Meskay is now recognized as one of the leading rice exporters in the country and, in addition to rice, is also engaged in the trading of other grains, including wheat, corn, and guar, in both local and export markets.

The Company is primarily engaged in the processing, manufacturing, and export of grains, including rice (Basmati and IRRI), corn, guar, and wheat, as well as a wide range of agricultural products. It is also involved in the trading of agricultural machinery and accessories and the provision of agricultural farming services. Currently, the Company has an annual rice processing capacity of 561,000 MT, with paddy processing plants located in Larkana, Shikarpur, Narowal, and Pakpattan, having a combined processing capacity of 54 MT per hour. The Company exports rice to markets across Africa, the Americas, Asia, and Europe. During the year, it also acquired a ~69% stake in Mandviwala Mauser Plastic Industries Limited, a company listed on the Pakistan Stock Exchange and engaged in the manufacturing and sale of plastic and allied products.

The majority ownership of the Company is held by Mr. Shahid Tawawalla (~72%), followed by equal shareholdings held by his father, Mr. Wahid F. Tawawalla (~14%), and his wife, Mrs. Huma Darugar (~14%).

The Company is wholly owned by the sponsoring family, which has maintained consistent ownership and oversight over time. This concentrated ownership structure is considered stable, reflecting long-term commitment, strategic alignment, and continuity in governance and decision-making.

The sponsors bring over two decades of experience in the rice export industry, having successfully navigated multiple business and economic cycles. Their long-standing involvement reflects a deep understanding of the sector, resilience amid market volatility, and the ability to adapt strategies in response to evolving domestic and international trade dynamics.

The Company derives significant financial strength and strategic support from its affiliation with a well-established group. This association provides access to shared resources, operational synergies, and financial backing, enhancing the Company’s credit profile, liquidity position, and overall ability to withstand market fluctuations.

The Company is currently governed by three directors: Mr. Wahid F. Tawawalla, Chairman of the Board; Mr. Shahid Tawawalla, Chief Executive Officer; and Ms. Huma Darugar. However, the existing Board of Directors (BoD) structure would benefit from streamlining to strengthen governance efficiency, improve oversight clarity, and support more effective strategic decision-making.

Mr. Wahid F. Tawawala, the Chairman of the Board, brings over four decades of experience and has been associated with the Board since its inception. The other sponsoring individuals include Mr. Shahid Tawawala, the Chief Executive Officer, who has over 28 years of overall experience, and Mrs. Huma Darugar, an Executive Director with nearly a decade of experience.

The Board of Directors is assisted by the Board Audit Committee and the Advisory and Human Resource & Remuneration Committee, comprising five and four members, respectively. The Committees are chaired by Mrs. Huma Darugar and Mr. Wahid F. Tawawala, respectively, and meet on a quarterly basis. The Board of Directors also convenes quarterly meetings. Minutes of both Board and Committee meetings are adequately maintained.

The Company’s external auditors, BDO Ebrahim & Co., have expressed an unqualified opinion on the financial statements for the year ended June 2025. The firm is QCR-rated and is placed in Category A of the State Bank of Pakistan’s panel of auditors.

The Company follows a linear organizational structure and operates primarily through its Finance, Accounts, Export and Logistics, Internal Audit, Administration and HR, and Supply Chain & Production functions. All functional heads report to the Chief Executive Officer, who is responsible for making key operational and strategic decisions.

Mr. Shahid Tawawala, Chief Executive Officer, has been associated with the Company since its inception and brings over two decades of extensive experience in the trading of rice and other commodities, contributing strategic leadership and deep industry expertise. Mr. Muhammad Abdullah, Chief Financial Officer, is a graduate in Commerce from the University of Karachi, with more than 18 years of professional experience in finance, accounting, financial management, and corporate reporting, playing a key role in overseeing the Company’s financial operations and governance.

The Company has a Finance Committee in place to oversee financial planning and strategic decision-making. While formal committee meetings are convened as required, the management team also engages in regular, need-based discussions to ensure agile decision-making and operational efficiency. This flexible approach enables the Company to respond promptly to emerging business requirements while maintaining sound governance practices.

The Company utilizes customized software solutions tailored to its specific operational and reporting requirements, enabling enhanced control, efficiency, and adaptability across business functions. In addition, standardized reports are generated on an as-needed basis, ensuring timely access to relevant financial and operational information to support informed decision-making and effective performance monitoring.

The Company has established a formal internal audit function that plays a critical role in promoting transparency, accountability, and effective risk management. It ensures compliance with internal policies, procedures, and regulatory requirements, while also identifying opportunities for operational improvement. Through regular reviews and assessments, the internal audit function contributes to strengthening the Company’s internal control environment and overall governance framework.

Pakistan’s rice sector reflects stable supply but significant export-side stress, indicating a demand-driven downturn rather than production constraints. Output held steady at ~9.7mn MT despite lower cultivated area (~3.6mn Ha), supported by improved yields (~2.7 MT/Ha), with non-basmati production at a five-year high and basmati slightly lower YoY. However, exports fell sharply during 8MFY26 to ~2.8mn MT (USD ~1.5bn) from ~4.2mn MT (USD ~2.5bn), driven primarily by intensified competition following India’s re-entry into global markets, particularly impacting price-sensitive non-basmati segments. While basmati prices remained relatively resilient (~USD 1,028/MT), non-basmati saw margin pressure (~USD 369/MT), with recent price support likely driven by domestic inventory buildup rather than demand. Export weakness has been exacerbated by geopolitical disruptions, including Middle East shipping constraints and the Pakistan-Afghanistan border closure, raising freight costs and limiting access to key markets. With domestic consumption (~3.9mn MT) heavily skewed toward basmati, excess non-basmati supply has accumulated as inventory, leaving the FY26 outlook dependent on external demand recovery, policy adjustments, and easing geopolitical pressures.

The Company is among the leading rice exporters in the country and holds a significant share of the market in terms of revenue, ranking as the second-largest exporter in the sector.

During FY25, the Company’s revenue was primarily driven by exports, which accounted for ~97% of total sales, while local sales contributed the remaining ~3%. The revenue base was dominated by rice, which represented 86% of total revenue (FY24: ~83%), followed by corn (~5%), sesame seeds (~6%), and guar (~1%). Within the rice segment, sales comprised IRRI-6 (~87%), brown rice (~11%), and basmati (~2%). Wheat, which had contributed ~11% in FY24, did not generate any revenue in FY25. Overall, the Company’s topline declined to ~PKR 34 billion in FY25 from ~PKR 59 billion in FY24, although it remained significantly higher than ~PKR 24 billion recorded in FY23.

The Company’s gross profit margin improved to ~11.6% in FY25 from ~10.0% in FY24, mainly driven by lower raw material costs, reflecting improved procurement efficiency and favorable input cost conditions. However, despite this improvement at the gross level, operating profitability weakened as the operating margin declined to ~4.6% from ~5.4% in FY24, primarily due to higher operating expenses that offset the gains from improved gross margins. At the net level, profitability came under further pressure, with the net profit margin falling sharply to ~0.3% from ~1.1% in FY24, driven by elevated finance costs and a higher effective tax charge, resulting in a significant erosion of bottom-line profitability despite relatively stable gross performance.

Ongoing improvements in operations through workflow streamlining, technology adoption, and resource optimization enhance productivity, efficiency, and sustainability, reinforcing the Company’s long-term growth strategy. During the year, the acquisition of ~69% stake in Mandviwala Mauser Plastic Industries Limited further supported this strategy by expanding the Company’s footprint, creating operational synergies, and strengthening long-term sustainable value creation.

The Company’s working capital cycle lengthened notably, driven primarily by an increase in inventory holding. Inventory days rose significantly to ~73 days in FY25 from ~45 days in FY24, reflecting higher stock retention. Trade receivable days also increased to ~14 days from ~9 days in the previous year, indicating a slight elongation in collection timelines. As a result, gross working capital days expanded substantially to ~87 days from ~54 days in FY24. On the payables side, trade payable days increased marginally to ~3 days from ~1 day in FY24, offering limited offset. Consequently, net working capital days rose to ~84 days from ~53 days in FY24, highlighting a considerable buildup in overall working capital requirements during the year.

The Company’s Funds from Operations (FCFO) declined sharply to ~PKR 1.68 billion in FY25 from ~PKR 3.2 billion in FY24, indicating a marked weakening in core operating cash generation. This deterioration directly impacted debt servicing capacity, with the finance coverage ratio falling substantially to ~1.3x from ~3.3x in FY24. The reduction suggests that operating cash flows now provide only a limited buffer to comfortably meet finance costs, thereby increasing reliance on external or non-operating sources of liquidity. Overall, the trend reflects a meaningful compression in internal cash generation strength and highlights heightened sensitivity to any further volatility in operating performance or financing costs.

The Company’s total debt declined slightly to ~PKR 8.89 billion in FY25 from ~PKR 10.0 billion in FY24, accompanied by a marginal increase in equity to ~PKR 10.51 billion from ~PKR 10.39 billion. This resulted in an improved leverage position, with the debt-to-equity ratio reducing to ~45.8% from ~51.0% in FY24, continuing its multi-year downward trend. However, the capital structure remains heavily weighted toward short-term borrowings, which account for ~99.5% of total debt. While leverage metrics have improved, the Company's continued reliance on short-term financing highlights the importance of maintaining strong liquidity management and proactive refinancing strategies. The strengthened financial position provides a solid foundation for managing upcoming debt maturities; however, ongoing monitoring of short-term credit market conditions remains essential to preserve financial flexibility and support effective capital management.