PACRA Maintains Entity Ratings of Jadeed Oil Extraction (Private) Limited.

The assigned ratings of Jadeed oil extraction (Pvt.) Ltd. (‘Jadeed’ Oil’ or ‘the Company’) reflects its strong affiliation with the Jadeed Group, with a substantial presence throughout the poultry supply chain. The Group engages in importing and breeding grandparent poultry stock, notably Ross-308. Jadeed Oil plays a pivotal role in supporting the Group's backward integration strategy, which further mitigates customer concentration risk and ensures raw materials' availability, providing a stable foundation for its financial profile. The Company's business line includes two main products: meal and semi-refined edible oil. Pakistan's edible oil industry heavily relies on imports since oilseeds and edible oil account for ~80% of the cost of production. During the year, 2.7mln tonnes of edible oil (including oil extracted from imported oilseed) of value PKR 794bln (US $ 2.8bln) was imported as compared to 2.2mln tonnes in FY23. Local edible oil production remains at 0.47mln tonnes (FY23: 0.50mln tonnes). During FY24, the Company strategically added a procurement of local rape seed, canola, and sunflower oil along with soybean oil and seed. This change was driven by the need to optimize its supply chain and adapt to market conditions. In FY24, the company's topline remained stable due to lower sales volume, driven by a reduced supply of soybean seeds, which led to a dip in actual production. However, higher prices helped sustain steady revenue. The topline remains dominated by soybean, rape, and sunflower meal (~72%) only to its Group Company- Jadeed Feeds. Gross margins remained thin, driven by rising raw material costs and competitive pressures. The Company faces credit risk stemming from its exposure to foreign exchange volatility, primarily due to its reliance on imported soybean seeds. The net income showed a reduction, resulting from increased costs, regulatory hurdles, and market uncertainties, affecting production efficiency and overall profitability. As a result, the Company faced challenges in maintaining its previous levels of profitability margins. However, the Company's financial risk remains strong supplemented by a healthy working capital cycle. On the other side, leverage indicators continue to improve on account of lower debt majorly comprising of short-term borrowings for funding working capital requirements. The ratings continue to reflect the extensive experience and strategic acumen of the promoters, which remain integral to the Company’s operations. Moreover, the group's integrated presence in the poultry sector provides comfort to the ratings.
Sustaining a positive outlook relies on upcoming quarters showcasing strong financial growth and maximizing synergies within the group. The management's ability to prudently manage the liquidity and debt profile of the Company while improving sales remain crucial. Any significant and/or prolonged deterioration in revenues and/or coverages will adversely impact the ratings.

About the Entity
Jadeed Oil Extraction (Pvt.) Limited, was incorporated in Nov-17. Jadeed oil is primarily engaged in the process of seed crushing and solvent extraction by mechanical and chemical processes, along with refining edible oil. At present, Jadeed Oil has a crushing capacity of 180,000 MT per annum. The Company is owned by the family of late Mr. Jan Mohammad Javaid. Jadeed Oil is majorly owned by Jadeed Feeds (~48%) and Mr. Jan Mohammad Javaid two sons, Mr. Muhammad Sohaib Javaid and Mr. Muhammad Safwan Javaid (~20% each). The remaining stake resides among Mr. Jan Mohammad Javaid's daughters, Ms. Maimoona Javaid and Ms. Fariha Javaid (~4% each) and his wife, Mrs. Shazia Javaid (~3%). The BoD is dominated by the sponsoring family. Board’s Chairman and the Company's CEO.