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The Pakistan Credit Rating Agency Limited
Press Release

Date
29-Oct-19

Analyst
Ayesha Malik
ayesha.malik@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 Shabbir Feed Mills (Pvt.) Limited

Rating Type Entity
Current
(29-Oct-19)
Previous
(30-Apr-19)
Action Maintain Maintain
Long Term BBB- BBB-
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

The global feed industry can be valued at around ~$460bln, with poultry (~$166bln) constituting ~36% of the total industry. Pakistan produces ~8mln MT of feed annually with a total of ~150 registered feed mills and ~200 unregistered feed mills catering to it.

The ratings reflects Shabbir Feed Mills strong presence in Southern Punjab in its related fields – poultry feeds, broiler meat and table eggs. The Company's topline improved backed by higher volumes. Moreover, procuring raw materials - maize and meal, at relatively low cost benefited the margins. The Company has a long working capital cycle due to seasonal nature of inputs that leads to longer holding period. Financial risk remains high due to significantly leveraged capital structure ans mismatch at trade level as the Company provides financial support to other group companies. Due to high quantum of borrowings, the Company's coverages remain stressed. The ratings incorporates diversified business interests of the sponsors.
The ratings are dependent on the management's ability to build profitable volumes while maintaining its margins. Financial discipline is crucial. Improvement in the debt mix and coverages remain critical. Meanwhile, strengthening of governance framework would be beneficial for the ratings.

About the Entity
Shabbir Feed Mills (Pvt.) Limited, is an established venture of Shujabad Group. The Company was incorporated in 2001 and is primarily engaged in manufacturing and selling poultry feeds,table eggs and broiler meat. The Company's feed mill, located in Multan, has a manufacturing capacity of 45 MT per hour.

Shabbir Feed Mills major shareholding vests with (Late) Mian Shabbir’s family (75%) with an equal stake divided among his five sons. Remaining of the Company’s share (25%) resides with Mr. M. Akram, one of group’s founders. Mr. Qasier Shabbir - (Late) Mian Sahbbir’s eldest son, with his experience of fifteen years in poultry and textile businesses, leads the Group and the Company as its CEO.

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.