PACRA Maintains Entity Ratings of Jadeed Feeds Industries (Pvt.) Limited

The ratings reflect Jadeed Feed's affiliation with Jadeed Group, a prominent and integrated player in the poultry supply chain, as well as its connections to various entities within the group, including Jadeed Oil Extraction (Pvt.) Limited and Jadeed Developers (Pvt.) Limited. The Group has a significant presence along the poultry supply chain as it imports and breeds grandparent poultry stock (Ross 308). The operations of the Company are strengthened by an experienced and qualified management team. The Company's current business line comprises three main products: poultry feed variants, poultry breeding stock, and day-old chicks. The poultry industry contributes ~1.3% to the country's GDP and directly and indirectly employs ~1.5 million people. It produces about 1.3 billion kilograms of poultry meat and over 18 billion eggs annually, providing a critical source of affordable protein for the population. Poultry farming has grown significantly over the past few decades, becoming an important sector of the national economy. The Company is susceptible to inherent risks within the feed industry, stemming from fluctuations in raw material prices. However, the Company has maintained a positive growth trajectory this year, achieving ~29% growth in topline during FY24. The Company's topline is dominated by poultry feed sales (~65%) followed by poultry breeder stock (~28%) and day-old chick sales (~7%). Revenue growth was driven by a combination of expanded market share, strong demand in the poultry product segment, and the positive impact of higher prices. Gross margins remained stable, primarily driven by effective management of manufacturing expenses. Operating profit mirrored this trend, benefiting from strong cost-control initiatives and efficient management of operating expenses. Additionally, net profit margins held steady, supported by a strong bottom line, despite the increase in finance costs and taxation. The company's inventory management system and associated efficiencies are expected to maintain low working capital costs. Its financial risk profile is supported by a healthy cash cycle that effectively funds working capital needs. Additionally, coverage ratios and capital structure, remain stable and adequate. The ongoing support from its sponsors augurs well for the assigned ratings. With the demise of the previous sponsor, the succession planning was evident with the ownership being passed onto the next generation. Moreover, ownership structure remains stable with a further succession plan also in place.
The ratings are dependent on the management's ability to prudently manage liquidity and working capital requirements, and also to build profitable volumes and adherence to strong financial discipline remains critical for the ratings. Envisioned improvement in business and financial profile along with effective breeder stock and day-old chick sales, is also a crucial factor. Significant deterioration in coverages and/or margins will have a negative impact on the ratings.

About the Entity
Jadeed Feeds Industries (Pvt.) Limited, was incorporated in Jun-08 as a private limited company .Currently, the Company's feed mills have a combined capacity of 240 MT/hour. Farms have a placement capacity of 2.6mln and a hatching capacity of 443mln eggs per annum. GP farms have a placement capacity of 0.34mln and a hatching capacity of 47.5mln eggs per annum. The Company is owned by the family of late Mr. Jan Mohammad Javaid. Majorly owned by his two sons, Mr. Muhammad Sohaib Javaid and Mr. Muhammad Safwan Javaid (~31% each) The remaining stake resides among Mr. Jan Mohammad Javaid's daughters, Ms. Maimoona Javaid and Ms. Fariha Javaid (~12% each) and his wife, Mrs. Shazia Javaid (~15%). The Board’s Chairman and the Company's CEO, Mr. Sohaib, play a pivotal role in making strategic decisions.