PACRA Assigns Entity Ratings to Meskay & Femtee Trading company (Pvt) Limited

Rice is among the five major crops of Pakistan and is the second main staple food, after wheat. In Pakistan, rice is grown in most of the Sindh and Punjab Province. Sindh specializes in producing the long grains white rice IRRI-6 and IRRI-9, while Punjab produces world-class Basmati rice. The major players in rice exports include Pakistan, India, Thailand, and Vietnam. During 9MFY22, rice crop area reflected an increase of 6% (9MFY22: ~3.5mln hec, 9MFY21: ~3.3mln hec). This led to an increase rice production by ~11% (9MFY22: ~9.3mln MT, 9MFY21: ~8.4mln MT). Out of this, around 4.1mln MT of rice is consumed locally, while, ~5mln MT is exported. The maximum contribution is from non-basmati rice (72%) exports, as basmati rice is locally consumed and minimal quantity (28%) is exported.
The ratings reflect Meskey & Femtee Trading Company (Pvt.) Ltd.'s ('Meskey & Femtee' or 'the Company') prominent position in the rice exporter's market of the country with substantial business volumes. The Company enjoys a strong relative position with a diversified product base. The Company has an end-to-end production capability, where paddy is procured and processed till finished goods. The Company's financial performance has improved over the years supported by higher volumetric sales. This along with the rupee depreciation supported the topline. The Company strategizes on a diverse customer base across regions and therefore, has the comparative edge. Margins, and in turn profitability witnessed a substantial increase during FY21 as the Company benefited from economies of scale amidst shipping challenges to exporters. The ratings derive comfort from the progress in financial performance as indicated in good margins over the periods. Sponsors' acumen is reflected in the development of corporate culture through enhanced business practices. Most of the goods are exported against LC & contract cover or through mega groups. The Company’s financial risk profile is characterized by a strong capital structure and coverage ratios while working capital management remains adequate. Envisioned improvements to ensure substantial growth in the Company are expected to positively impact the performance of the Company.
The ratings are dependent upon the sustenance of business volumes under the current challenging environment. As global economy undergoes distress, business sustainability emerges as the key challenge for the exporters. Meanwhile, keeping up with a stable financial risk profile, with an increased emphasis on working capital management, remains imperative for ratings.

About the Entity
Meskey & Femtee Trading Company (Pvt.) Ltd. (‘Meskey & Femtee’ or ‘the Company’) was incorporated in 2006 as a Private Limited Company. The Company is primarily engaged in processing/manufacturing and export of grains (rice, corn, guar, and wheat) and all types of agricultural products, trading in agriculture machinery, and accessories, and providing agriculture farming services. Currently, the Company has a rice processing capacity of 65MT per hour. Meskey & Femtee mainly exports rice to Africa, America (North and South), Asia, and Europe. Major ownership of the Company resides with Mr. Shahid Tawawalla (~ 72%); followed by an equal holding between his father, Mr. Wahid F Tawawalla (~14%), and his wife, Mrs. Huma Darugar (~14%). Mr. Shahid heads the Company as the CEO and is supported by a team of experienced individuals.