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The Pakistan Credit Rating Agency Limited
Press Release

Date
21-Jan-20

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
(21-Jan-20)
Previous
(22-Jul-19)
Action Maintain Maintain
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 and commercial poultry. With an investment of more than PKR 700bln in FY19, Pakistan is sufficient in poultry meat and egg production. However, lacks regional peers and world average in per capita protein consumption. This shows room for growth. The industry has witnessed 8-10% annual growth in recent years.

The ratings reflect Sadiq Poultry’s association with an established and vertically integrated poultry group, Sadiq Group. The Company has an established profile in poultry industry and enjoys the lead position in broiler, chicken, eggs and day old chicks segment. Due to relatively low prices of poultry products, topline posted a decline and remains concentrated towards day old chicks sale. Business margins improved as the management was able to keep the costs under control and managed to reap economies of scale. Nevertheless, the Company remains exposed to volatility in prices and contingent health risk associated with its products (live chicken stock and eggs). Procuring feed in bulk from Group’s own company create synergies. The Company’s financial risk profile is characterized by moderate leverage and adequate coverage ratios. The loan mix is skewed towards short term borrowings to fulfill the working capital requirements.
The ratings are dependent on the management's ability to prudently mange the business risk for of perishable consumer products, while sustaining business margins. Moreover, governance framework needs attention. Meanwhile, prudent management of working capital and maintaining strong coverages remain critical.

About the Entity
Sadiq Poultry (Pvt.) Limited is a successful parent venture of Sadiq Group, a well-known player of Pakistan’s poultry industry. It was incorporated in 2004 and is primarily engaged in operating 40 poultry farms, out of which 30 are breeder farms, 4 broiler units, 4 laying units and 2 hatcheries. The Company has its own livestock pharmaceutical setup, to ensure birds health.

Its present shareholding structure indicates that Dr. M. Sadiq, is the man at the last mile, as he holds major shareholding. Remaining stake resides with his two sons Mr. Asif Zubair and Mr. Salman Sadiq. Sponsoring family dominates the Board of Sadiq Poultry, which comprises five members. Board’s Chairman and the 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.