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

The assigned ratings of Welcon Chemicals (Pvt) Limited (“Welcon” or “the Company”) continue to derive strength from the long‐standing experience of the Sponsors, established track record for operations, and a strong competitive position. The Company operates as a dynamic player in the pesticide industry, specializing in a comprehensive range of Agrochemical products. The Company has a diversified revenue stream generating ~68% of revenue from pesticides, followed by seeds (~17%) and fertilizers (~15%). The Company operates through a robust dealer network, with over 1,000 dealers strategically located nationwide. Welcon has expanded its product portfolio by incorporating locally produced biofertilizers, a cost-effective and efficient substitute for urea and DAP-based fertilizers. While the raw materials for pesticides are procured predominantly from China, raw material for fertilizers is procured locally from the associated companies. To effectively mitigate risks, the Company employs a streamlined procurement approach and reinforces its business presence in the Punjab region. During FY24, the Company witnessed a value-driven increase of ~7.7% in topline, primarily from pesticides. However, overall business margins have been squeezed due to increased costs. On the financial risk front, the Company relies significantly on short-term borrowings to manage its working capital requirements. Welcon holds a stable capital structure along with adequate coverages.
The ratings are dependent upon an improvement in the business and financial profile of the Company. Any deterioration in the topline, margins, or cashflows remains critical to the ratings. The Company’s sustained business performance remains vital to the ratings.

About the Entity
Welcon Chemicals ("Welcon" or "the Company") was incorporated in 1994. The Company stands as a pioneering entity within the Allahdin Group and offers a variety of agri-based productions ranging from urea and DAP-based fertilizers to pesticides and seed varieties. The Company’s plant is located at Industrial Estate Multan.
Welcon is majorly owned by Mr. Zain Iftikhar (~68%), followed by Ch. Zia ur Rehman (~15%), Ch. Iftikhar Nazir (~13%), Mr. Masood ur Rehman (~2%), and Ms. Ghazala Ghazni (~2%) (w/o Ch. Iftikhar Nazir – the Group's Chairman). A team of professionals assists the BoD's Chairman and the CEO of the Company.