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The Pakistan Credit Rating Agency Limited
Press Release

Date
25-Sep-18

Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings to Hi-Tech Edible Oils (Pvt.) Limited

Rating Type Entity
Current
(25-Sep-18 )
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

The ratings reflect long association of Hi-Tech Edible Oils with Hi-Tech Group; well known player of poultry industry. Hi-Tech is primarily operating in two segments 1) Edible Oil (well structured) and, 2) Poultry Feeds (fragmented). Company's turnover increased during past few years, owing to the plant expansion in two phases. Although, margins remained on the lower side due to risk related to the price fluctuation depending upon the demand supply gap. Higher costs are majorly related to raw material procurement, which is being imported. Currently, the company is locally selling both edible oil and poultry meal. However, some export avenues may be explored by management in future. Going Forward, company’s sales are expected to improve owing to increased installed capacity. Inventory management system and related efficiencies would require attention which are being effected by the long lead time. Being an importer of oil seeds (Soybean) in Pakistan, there is an inherent risk involved of currency fluctuations and prices of product, left open to market forces. Financial risk profile of the company is characterised by leveraging due to high short term borrowing related to working capital.

The ratings are dependent on relative positioning of the company and its ability to prudently manage the liquidity and debt profile of the company, particularity working capital, while improving business margins. The company plans no long term debt. Effective changes in governance framework would be good for ratings.

About the Entity
Hi-Tech Edible Oils (Pvt.) Limited, is a venture of Hi-Tech Group; well-known player of Pakistan’s poultry industry. Hi-Tech Edible oil was incorporated in 2002 and commenced business in 2006 as Private Limited Company. Hi-Tech Edible Oils (Pvt.) Limited is primarily engaged in the process of seed filtering and crushing, selling edible oil and meal.

The overall control of the group companies’ vests with four founding members with equal shareholding. All the members are having executive roles in group companies. Dr. Anwar Mehmood Randhawa is the chairman of all group companies. He is Doctor of Veterinary Medicine. He possess experience of 44 years in Poultry and Integrated businesses. Dr. Muhammad Arshad is the CEO of the Group and also the director of the board. He is also a Doctor of Veterinary Medicine by profession and got his degree from University of Agriculture, Faisalabad (Pakistan) in 1976. He is assisted by a team of professionals who enjoys long association with the company.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.