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The Pakistan Credit Rating Agency Limited
Press Release

Date
10-Mar-22

Analyst
Shayan Farooq
shayan.farooq@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
(10-Mar-22 )
Previous
(14-Sep-21 )
Action Maintain Maintain
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch Yes -

The poultry industry is one of the largest agro-based segments in Pakistan, comprising domestic & commercial poultry. The industry has posted annual growth of ~ 10%-12% lately. Pakistan is sufficient in poultry meat and egg production. However, per capita protein consumption remains low (11th) when compared to the world's average. The industry generates an estimated annual revenue of ~ PKR 1,092bln from local and export sales during FY21. The industry has witnessed recovery after the dip in prices and demand amidst the pandemic. Subsequently, prices of poultry products, especially day-old chicks, witnessed a hike and benefited the players involved in the poultry allied chain. Increasing demand, and hence, prices eased down the liquidity problems of the industry. Moreover, SBP measures have provided respite. As business avenues became operational, demand for poultry products is likely to stay favorable for the industry players.
The ratings reflect Sadiq Poultry (Pvt.) Ltd.'s ('Sadiq Poultry" or "the Company') association with an established and vertically integrated poultry Group, Sadiq Group. The Company has an established profile in poultry industry and is a leader in broiler, chicken, eggs and day old chicks segment. Post Dr. Sadiq's demise, the new Sponsors have initiated a transition in shareholding and division of hatcheries and breeder farms of the Company. The division is currently in process, and is between the two families of Dr. Sadiq; Mr. Asif Zubair & Mr. Salman Sadiq and Ms. Saadia Sadiq & sons. Till date, two layer units and three breeder farms have been transferred to Sadiq Feed, a group company. Whereas, it is currently not decided who will own and manage the remaining farms.
The ratings are dependent on the Sponsor's ability to transfer the ownership and assets of the Company while maintaining harmony. This along with the management's ability to prudently manage business risk for perishable consumer products, while sustaining business margins. Going forward, continued harmonization between Sponsors and consistent generation of sustainable operational cashflows is important.

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.
After Dr. Sadiq's demise, the shareholding was divided between his two wives and six children: Salman Sadiq (42%), Asif Zubair (25%), Sanan Sadiq (9%), Saad Sadiq (9%), Saima Elahi (4%), Ayesha Bilal (4%), Rasheeda Begum (3%) and Saadia Sadiq (3%). The Company was headed by Mr. Asif Zubair, the eldest son of Dr. Sadiq, as the CEO. The Company's ownership and management are in transitional phase currently.

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.