PACRA Maintains Entity Ratings of Sapphire Dairies (Pvt.) Limited

The assigned ratings for Sapphire Dairies (Pvt.) Limited (“the Company” or “SDPL”) reflects the prominent profile of its sponsoring group, the Sapphire Group, a renowned textile conglomerate in Pakistan. The group has appreciable business diversity in multiple industry segments, including Power, Cement, Real Estate, and Dairy. Sapphire Dairies is a strategic venture of the group, driven by the vision that corporate farms can enhance dairy economics and hygiene standards for the people of Pakistan and its investors. SDPL engages in the rearing and farming of dairy animals and has transformed into a fully vertically integrated dairy unit. The Company operates a state-of-the-art corporate dairy farm, equipped with a fully automated milk collection mechanism and real-time production status updates. The processing and packaging facility of processed Milk, Dairy, and Fruit beverages meets the high-end international quality standards. In terms of revenue contribution, SDPL’s core product remains raw milk, followed by dairy-based and fruit beverages, along with related offerings. During 9MFY25, the Company reported a topline of PKR 3.5bln (9MFY24: PKR 3.1bln; FY24: PKR 4.4bln), primarily driven by improved business volumes in processing, supported by stable raw milk prices over the past three quarters. Profitability was further supported by non-core income through revaluation gains on dairy livestock, an important lever in a fundamentally low-margin industry. SDPL has also initiated a strategic push into exports by dispatching multiple consignments of fruit beverages. Additionally, the Company’s adoption of advanced genetic improvement practices in dairy breeds has contributed to higher milk yields across its cattle base. Looking ahead, the Company plans to diversify its operations by entering the fattening business domain, expanding its footprint within the livestock value chain. The board of SDPL is more of an advisory nature, accompanied by professional management. The financial risk profile of the Company is considered adequate, with an aptly managed working capital cycle due to the perishable nature of the product. The cash flows and coverages of the Company are considered adequate. The Company maintained a moderately leveraged capital structure with short-term borrowing to fund working capital requirements, mainly dedicated to the procurement of feed. The dairy industry faces key challenges, including high sensitivity to raw milk pricing, feed availability, and the need for disciplined livestock and treasury management.
The ratings are dependent upon the management’s ability to improve profitability, generate sufficient cash flows, and maintain coverages at an optimal level. The adherence to the debt matrix at an optimal level is a prerequisite for assigned ratings.

About the Entity
The Company was incorporated on January 31, 2008, as a private limited company. The principal activity of the Company is to run a dairy farm for the production and processing of milk and dairy products. It is a subsidiary of Diamond Fabrics Limited, which owns a majority stake (~53.755%) in the company. The rest of the shareholding lies with other group Companies. The governance structure includes five members, all belonging to the sponsoring group. Mr. Mian Mohammad Abdullah is the Chairman and Founder of the Sapphire Group of Companies. He has been honored twice with Pakistan’s top civilian award, Sitara-e-Imtiaz, for his contributions to business. All board members have had a long association with the group and bring extensive experience to their roles.