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

Sapphire Dairies (Pvt.) Limited ("Sapphire Dairies" or "the Company") is one of Pakistan's leading corporate dairy farming enterprises, principally engaged in dairy farming and the production, processing, and sale of fresh milk and value-added dairy products. The Company operates a vertically integrated farm-to-pack business model from its production facility located on Manga Raiwind Road, District Kasur, encompassing dairy farming, milk processing, packaging, and distribution. Sapphire Dairies is a wholly owned subsidiary of the Sapphire Group, one of Pakistan's leading business conglomerates with diversified interests across textiles, energy, real estate, and other sectors. Fresh milk sales continue to constitute the core revenue stream, with Nestlé Pakistan Limited remaining the Company's primary customer under a long-standing commercial relationship. The Company has also diversified its product portfolio through value-added dairy products marketed under the Rivayat, Frutru, and Karak brands, while expanding into cow fattening for meat exports.
The Company maintains a herd of approximately 4,500 imported Holstein-Friesian cattle sourced from Australia and the Netherlands, supported by modern livestock management practices. Operations comprise climate-controlled housing, customized feeding systems, advanced milking parlors, milk chilling infrastructure, and in-house veterinary services. Herd productivity is supported through scientifically formulated nutrient-enriched feed and continuous health monitoring by specialized veterinary professionals. These initiatives contribute to improved milk yields, animal health, and operational efficiency. Furthermore, the Company has expanded its export footprint to the Gulf region, China, the United States, and Singapore, supporting product diversification and broadening revenue streams.
During 9MFY26, the Company generated revenue of approximately PKR 3.7bln (9MFY25: PKR 3.5bln), reflecting moderate topline growth supported by higher sales volumes and continued demand from existing customers. However, gross profit margins contracted to 6.6% (9MFY25: 8.7%), primarily due to elevated feed and other input costs amid geopolitical uncertainties and supply chain disruptions. Consequently, profitability remained under pressure despite revenue growth. Capital expenditure undertaken during the period primarily related to the development of cow-fattening sheds, feed processing facilities, and associated farm infrastructure aimed at supporting future operational expansion. Short-term borrowings increased by approximately 9.7%, mainly to finance the import of replacement heifers, procurement of feed-related raw materials, and incremental working capital requirements.
Going forward, the Company intends to import approximately 400 Holstein-Friesian cattle to strengthen its milking herd and support the expansion of its cow-fattening business. These investments, together with recently completed infrastructure development and increasing penetration into export markets, are expected to enhance production capacity, improve operating efficiencies, and diversify revenue streams over the medium term.
The ratings remain sensitive to sustained improvement in profitability, maintenance of adequate operating cash flows, and preservation of debt coverage indicators in line with the assigned rating benchmarks. Continued adherence to the prescribed debt matrix will remain a key rating consideration.

About the Entity
Sapphire Dairies (Pvt.) Limited was incorporated on January 31, 2008, and is engaged in dairy farming and the production and processing of milk and dairy products. The Company is a subsidiary of Diamond Fabrics Limited (53.755%), with the remaining shareholding held by other Sapphire Group companies. The Board is chaired by Mr. Mian Mohammad Abdullah, founder of the Sapphire Group, while the Company's operations are managed by CEO Mr. Amer Abdullah and an experienced management team.