PACRA Maintains Entity Ratings of Welcon Chemicals (Pvt.) Limited

Welcon Chemicals (Pvt.) Limited operates in three segments: i) pesticides ii) seeds and iii) fertilizer mainly through its dealer and distribution network. The Company is one of the pioneer groups entered in this segment back in 1990's. The Company has reported adequate turnover, with the contribution of each segment, while pesticide remains predominant segment in terms of revenue. Profitability of the company is slight. Welcon Chemicals expanded its operations by entering into different businesses in agriculture industry and achieving operational efficiency. The company's plant is located at Jhanian – Khanewal; near the Company’s home market (Multan) which benefits the cost structure. The ratings take into account the need for improvement in the control environment of the company, with emphasis on quarterly accounts. To engage customers and to enhance foot print in the market, group’s R & D performs researches /tests frequently and engage customers by arranging “Bhaitak” in far flung areas to address farmer's real problems. The Company meets its working capital requirements through a mix of internal cashflows and short term borrowings. However, the financial risk remains good on account of low long term finance and adequate coverages. Going forward, the improvement in bottom-line and cash flows, standardization of the governance structure and financial transparency is vital. The ratings also take into account the sponsor strength as AllahDin group has interests in diversified segments of agriculture.
The ratings are dependent on improvement in business and financial profile of the company. Any deterioration to topline, margins and/or cash flows remains critical to the ratings. The company's sustained business performance in current stretched economic scenario - remains vital for ratings. The control environment needs improvement. This has been incorporated in the rating.

About the Entity
Welcon Chemicals (Pvt.) Limited – one of the pioneer companies of AllahDin Group – is a private limited company. Majority stake is with Ch. Iftikhar Nazir's family. As Ch. Iftikhar Nazir holds 56.1%, while rest is with his wife Mrs. Ghazala Asmat and their son Mr. Zain Iftikhar. Other shareholders are Mr. Zia Ur Rehman and Mr. Atta Ur Rehman holding 26.5% and 3.9% respectively. The overall board comprises only two members who are also owners of the company. Ch. Iftikhar Nazir is an executive director (CEO) while Mr. Zia Ur Rehman is a non-executive director.

The group Chairman and CEO Welcon Chemicals, Ch. Iftikhar Nazir is the pioneer of the AllahDin Group of companies. He has accomplished experience of ~3 decades in the industry. Mr. Zain Iftikhar Chaudhry, son of Ch. Iftikhar Nazir is COO of the company. He is graduate in Financial Management Services from York University, Toronto.