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The Pakistan Credit Rating Agency Limited
Press Release

Date
18-Sep-18

Analyst
Faiqa Qamar
faiqa.qamar@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 Maintains Entity Ratings of Sadiq Poultry (Pvt.) Limited

Rating Type Entity
Current
(18-Sep-18)
Previous
(22-Mar-18)
Action Maintain Initial
Long Term A- A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Poultry is one of the largest agro based segment in Pakistan, accounting both domestic & commercial poultry. With an investment of almost PKR 700 billion in FY18, industry had an annual growth of 10%. Pakistan is very well sufficient in poultry meat and egg production. However, lacks in per capita protein consumption.

The ratings reflect Sadiq Poultry’s association with an established vertically integrated poultry group, named SB Group. The company enjoys established profile in its business – broiler, chicken, eggs and day old chicks. It is a leading player in these segments with growing revenues. After significant expansion in capacities, the management kept the cost under control leading to stable margins. However, the management is cognizant of this and its near-term strategy is focused on consolidation. This includes increased focus on eggs and broiler business post settlement of assets amongst family and introduction of efficiency in operations-like use of caged broiler breeding technology. Nevertheless, the company remains exposed to volatility in demand pattern and contingent health risk to its products. Procuring feed in bulk from group’s own company would manage related risks. Company’s financial risk profile is characterized by moderate leverage. Loan mix, -long and short term- though adequate is planned to be improved further.

The ratings are dependent on the management's ability to prudently mange the business risk typical to short cycle because of perishable consumer products, while sustaining business margins. Moreover, governance framework needs attention.

About the Entity
Sadiq Poultry (Pvt.) Limited is a successful parent venture of SB Group; well-known player of Pakistan’s poultry industry. It was incorporated in 2004 and is primarily engaged in operating 21 poultry breeding units/farms, 80 broiler farms, laying units maintaining 2.1 million birds with commercial egg production capacity of 2 million from 4 poultry hatcheries. Company has its own livestock pharmaceutical setup, to ensure birds health.

Sadiq Poultry is dividing and consolidating its domestic operations. Its present shareholding structure suggests that Dr. M. Sadiq, is man of the last mile, as he holds the major shares. For the time being, remaining stake resides with his two sons Mr. Asif Zubair and Mr. Salman Sadiq. Sponsoring family dominates the board of Sadiq Poultry and comprises five members. Board’s Chairman and company's CEO, Dr. Muhammad Sadiq, plays a pivotal role in making strategic decisions.

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.