PACRA Maintains Entity Ratings of Hi-Tech Edible Oils (Pvt.) Limited, Assigns Negative Outlook
The edible oil industry of Pakistan, largely dependent on imports, has been impacted by the devaluation of Pakistani Rupee. This has increased the cost of production and impacted margins for industry players. Moreover, challenging industry dynamics represented by stiff competition, low domestic supply for oil seed and rising interest rates are likely to keep the industry under pressure. The ratings reflect the Company’s association with Hi-Tech Group, one of the major players in Pakistan’s poultry and allied industry. An expanding domestic market in conjunction with enhancement in production capacity has led to increased revenues over the past few years. However, high dependence on imported raw materials makes the Company susceptible to external dynamics. Recent devaluation of Pakistani Rupee has had a lagged impact on the Company, impacting margins and eroding profitability. Resultantly, the Company’s financial profile has deteriorated, represented by adequate working capital management, weak coverages and a highly leveraged capital structure.
The ratings are dependent on the Company's relative positioning and its ability to prudently manage liquidity and debt structure. Improvement in margins and ensuing coverages while, ensuring working capital discipline, is critical for future rating movement. Sustained losses and weak coverages will adversely impact the ratings.
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 operations 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 on 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.