Guard Agricultural Research and Services (Pvt.) Limited

CREDIT RATING REPORT | Oct-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
23-Oct-25 A- A2 Stable Maintain -
24-Oct-24 A- A2 Stable Maintain -
24-Oct-23 A- A2 Stable Initial -
About the Entity

The Company is part of the Guard Group, started in 1948 with a strong foothold in the filters & lubricants industry, and was incorporated in 1989. The Company has bifurcated its operations into two divisions: Agriculture and Food. The agriculture division includes trading of imported hybrid & local hybrid seeds under the brand name of ‘Guard’ & imported agricultural machinery. While the Food division includes the processing of basmati rice and trading of pasta & salt under the brand name of ‘Guard’. The Company’s major ownership resides with brothers Mr. Iftikhar Ali Malik (24.24%), Mr. Shahbaz Ali Malik (24.24%), Mr. Waqas Ali Malik (11.64%), Mr. Shahzad Ali Malik (27.25%), and Mr. Hamza Waqar Malik (12.60%).

Rating Rationale

The ratings reflect Guard Agricultural Research & Services (Pvt.) Limited’s (“Guard” or “the Company”) strengthening business position within Pakistan’s agriculture, seed, and food value chain. Operating under the flagship “Guard” brand, the Company has established a diversified portfolio comprising hybrid and basmati rice seeds, processed basmati rice, wheat seeds, pasta, and salt, marketed domestically and exported to over 45 international destinations across Asia, the Middle East, North America, Africa, Europe, and Australia. Backed by the Guard Group’s diversified industrial base—spanning automotive components, lubricants, friction materials, filters, and food products—Guard benefits from significant operational synergies, economies of scale, and strong governance continuity. The sponsoring family’s multi-generational business expertise and strategic leadership continue to underpin the Company’s credit quality, reinforcing its financial resilience and long-term stability. The Board of Directors, predominantly represented by the sponsoring family, is supported by a technically proficient and experienced management team that oversees the Company’s two principal segments—Agriculture and Food. The Agriculture division focuses on the trading and development of imported hybrid seeds, locally developed rice seeds, and agricultural machinery, while the Food division manages the processing, packaging, and marketing of premium basmati rice, pasta, and salt under the “Guard” label. The Company’s integrated business model ensures complete value-chain control, providing superior quality assurance, operational transparency, and consistency from cultivation through to final distribution.
The rice sector, a significant contributor to Pakistan’s rice sector remains a key contributor to economic growth. While total rice production for CY25 was initially projected at approximately 10mln tons, but recent flooding in Punjab and Sindh affecting ~10–12% of the crop has disrupted supply chains, inundated agricultural land, and exerted upward pressure on domestic prices. These developments have posed significant challenges to both food security and the sector’s export competitiveness. In FY24, the Company recorded a notable 27% year-over-year increase in topline, primarily driven by record-high rice production. This growth was largely attributed to the favorable aftereffects of the floods experienced, which contributed to improved soil fertility and yields. However, this growth momentum could not be sustained in FY25, as adverse climatic conditions and below-average rainfall constrained crop yields, thereby tempering the Company’s revenue trajectory, which recorded a modest increase of approximately 3.8% during the year. The Company’s gross profit margin improved to 16.9% (FY24: 14.1%), reflecting enhanced operational efficiency and disciplined procurement practices.

Key Rating Drivers

Prudent management and maintenance of a stable financial risk profile, especially in terms of the working capital, cash flows, and coverages is imperative for the ratings. Additionally, debt servicing, capitalizing international demands, and envisioned improvements in qualitative factors, going forward, remain crucial for the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Guard Agricultural Research and Services (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Guard Agriculture Research & Services (Private) Limited (‘Guard Agriculture’ or the ‘Company’) was incorporated in 1989 as a Private Limited Company under the Companies Ordinance, 1984 (now Companies Act, 2017)


Background

The auto spare parts business began in 1948 under Mr. Muhammad Shafi Malik as Malik Auto Store. As the business expanded into producing auto filters for tractors and agricultural machinery, it was rebranded as Malik Auto & Agricultural Industries (Pvt.) Ltd. In 1989, the Company established Guard Agriculture, becoming the first private sector organization in Pakistan to create an in-house rice research and development facility. This initiative was complemented by the launch of a modern rice milling and processing plant, installed by Yanmar of Japan.


Operations

Guard Agriculture operates through two main divisions: Agriculture and Food. The Agriculture division focuses on trading imported hybrid seeds, locally developed hybrid seeds under the 'Guard' brand, and imported agricultural machinery. The Food division handles the processing of basmati rice and the trading of locally sourced pasta and salt, which are packaged at the Company’s warehouse. The rice operations are promoted with the tagline 'From Seed to Plate,' with cultivation taking place on company-owned and leased land, as well as through supervised farming contracts. Packaged basmati rice is sold domestically and exported under the 'Guard' brand to over 40 countries in Asia, the Middle East, North America, Africa, Europe, and Australia. The Company’s sole processing facility is located in Muridke, with a capacity of 12.5 metric tons per hour, while its corporate office is based in Lahore


Ownership
Ownership Structure

Guard Agriculture Research & Services (Private) Limited is family-owned, with ownership divided among the following brothers: Mr. Shahzad Ali Malik (27.25%), Mr. Iftikhar Ali Malik (24.24%), Mr. Shahbaz Ali Malik (24.24%), Mr. Hamza Waqar Malik (12.60%), and Mr. Waqas Ali Malik (11.64%).


Stability

Guard Agriculture Research & Services (Private) Limited is entirely owned by the sponsoring family, with a stable ownership structure. There has been no recent change in the shareholding structure of the Company. Shareholding is expected to remain with the sponsoring family through other group entities.


Business Acumen

The sponsoring family has been actively engaged in the agricultural and rice business since 1989, reflecting over three decades of industry experience. Their long-standing involvement underpins operational stability and a deep understanding of market dynamics.


Financial Strength

The sponsors have shown their commitment to the Company by providing funds as needed. Additionally, the Company benefits from the financial strength of the Guard Group, which offers extra support when required


Governance
Board Structure

The Company’s Board mainly includes members of the sponsoring family, with three executive directors and one non-executive director. The lack of independent directors on the board indicates potential areas for improvement in the governance structure.


Members’ Profile

e Mr. Iftikhar Ali Malik, the Chairman of the Board, has been associated with the company since 1989 and also serves as the Group Chairman. He is a well-recognized leader in both national and international trade and industry. Mr. Shahbaz Ali Malik, a Fellow Chartered Accountant (FCA), brings 41 years of professional experience. Additionally, Mr. Waqar Ali Malik and Mr. Shahzad Ali Malik, both graduates, contribute 31 and 25 years of experience, respectively.


Board Effectiveness

The Board has the strength of all members belonging to the same family, increasing their cohesiveness. To ensure effective governance, the Board has formed two committees, namely, (i) Audit Committee, and (ii) Human Resource and Remuneration Committee.


Financial Transparency

The external auditors of the Company, Crowe Hussain Chaudhury & Co Chartered Accountants, have expressed an unqualified opinion on the financial statements of the Company for the year ended Jun-23. The firm is QCR rated placed in category ‘A’ of the SBP’s panel of auditors.


Management
Organizational Structure

The Company has developed a defined organizational structure keeping in mind the Company’s operational needs. The Company operates through Procurement, Sales and Marketing, Finance and Accounting, Production, Technical and Administration departments.


Management Team

The Company has developed a defined organizational structure keeping in mind the Company’s operational needs. The Company operates through Procurement, Sales and Marketing, Finance and Accounting, Production, Technical and Administration departments.


Effectiveness

The experience of the sponsors along with a professional management team has helped the Company to streamline its operations. However, Management’s effectiveness and efficiency can be ensured through the presence of management committees. The absence of management committees indicates room for improvement


MIS

The company has an in-house IT team that developed an Oracle-based ERP system to generate management information system (MIS) and operational reports.


Control Environment

To ensure operational efficiency, the Internal Audit Function is in place that identifies and reports risks. The audit committee reviews the internal audit department reports and planned activities


Business Risk
Industry Dynamics

Rice is one of the major staple foods (second after wheat) as well as cash crops in Pakistan. ~52% of the total rice production in Pakistan is done in Punjab, ~38% in Sindh and remaining ~8% in Baluchistan. Pakistan ranks 11th in the global rice production (~50% basmati; remaining ~50% coarse types). Rice production is estimated at ~9.0mln MT for FY24 due to better climatic conditions and more availability of water for irrigation Pakistani rice exporters generated a historic $3.93 billion in foreign exchange during FY24, exporting approximately 6 million tons of rice. This achievement was largely facilitated by India's temporary ban on rice exports following a short crop, positioning Pakistan to capitalize on its competitive standing in the global market, where India remains a key rival.


Relative Position

As per management representation, the Company is a prominent player in Pakistan’s rice seed market. Within the rice segment, the Company focuses exclusively on premium packaged rice, which has enabled it to position itself among the leading brands in the country.


Revenues

The Company derives its revenue primarily from the sale of imported hybrid seeds, eight variants of locally marketed basmati rice, and the export of basmati rice to over 45 international destinations — with key markets across Asia, the Middle East, and Europe. During FY25, the Company reported net sales of PKR 11bln (FY24: PKR 10.6bln), reflecting a growth of 4% YoY. This performance was mainly driven by a notable increase in local sales (FY24: PKR 9.4bln), underscoring the Company’s strengthening domestic footprint and its continued ability to leverage international demand.


Margins

The Company demonstrated stability in FY25, achieving an improvement in gross margins to 16.9%, which signals enhanced operational efficiency. The net profit margins also remained stable at 4% for both FY25 and FY24, reflecting steady bottom-line performance despite rising costs. As a result, the Company’s net profit increased to ~PKR 470mln in FY25 (FY24: ~PKR 453mln), despite the increasing finance costs. This indicates resilience in the face of macroeconomic challenges.


Sustainability

The Company’s sustainability is anchored in decades of managerial experience, financial support from the Guard Group, and its active involvement in agricultural research, which enhances long-term growth prospects.


Financial Risk
Working capital

The Company’s working capital cycle shows improvement, supported by strong cash flows. In FY25, the net working capital cycle increased to 48 days from 46 days in FY25. Trade receivable days remained stable at 41 days, while trade payable days slightly incresed to 17 from 16 days in the prior year. These metrics indicate enhanced operational efficiency and liquidity


Coverages

During FY24, FCFO increased significantly to PKR 754mln (FY23: PKR 551mln). The interest coverage ratio remained stable at 6.0x (FY23: 7.1x). The finance cost saw a notable decline (FY25: PKR 62mln, FY24: PKR 136mln) because of the decline in Policy rates.


Capitalization

The Company maintains a low-leverage capital structure, with leverage decreasing to 17% (FY24: 18%), driven by an increase in  short-term and long term borrowings, which increased to PKR 579mln (FY24: 519mln). The Company's debt is exclusively reliant on short-term borrowings, highlighting its conservative financing approach.
 
 

Oct-25

www.pacra.com

Guard Agricultural Research and Services (Pvt.) Limited

financial summary

(PKR mln)

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Jun-25
12M		 Jun-24
12M		 Jun-23
12M
Management Audited Audited
A. BALANCE SHEET
1. Non-Current Assets 1,371 1,399 1,060
2. Investments 0 0 0
3. Related Party Exposure 62 50 0
4. Current Assets 3,930 3,874 4,325
a. Inventories 717 647 881
b. Trade Receivables 1,670 887 1,198
5. Total Assets 5,363 5,323 5,385
6. Current Liabilities 1,923 2,396 2,830
a. Trade Payables 458 578 363
7. Borrowings 579 519 643
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 197 181 118
10. Net Assets 2,663 2,228 1,794
11. Shareholders' Equity 2,663 2,228 1,794
B. INCOME STATEMENT
1. Sales 11,025 10,622 8,357
a. Cost of Good Sold (9,162) (9,125) (7,140)
2. Gross Profit 1,863 1,498 1,217
a. Operating Expenses (1,341) (1,033) (768)
3. Operating Profit 522 465 449
a. Non Operating Income or (Expense) 96 194 31
4. Profit or (Loss) before Interest and Tax 619 659 480
a. Total Finance Cost (62) (136) (85)
b. Taxation (87) (71) (51)
6. Net Income Or (Loss) 470 453 344
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 557 754 551
b. Net Cash from Operating Activities before Working Capital Changes 557 620 477
c. Changes in Working Capital 0 (18) 163
1. Net Cash provided by Operating Activities 557 602 640
2. Net Cash (Used in) or Available From Investing Activities 0 (467) (290)
3. Net Cash (Used in) or Available From Financing Activities 0 (125) 254
4. Net Cash generated or (Used) during the period 557 9 604
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 3.8% 27.1% 69.0%
b. Gross Profit Margin 16.9% 14.1% 14.6%
c. Net Profit Margin 4.3% 4.3% 4.1%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 5.1% 6.9% 8.6%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 19.2% 22.5% 21.2%
2. Working Capital Management
a. Gross Working Capital (Average Days) 65 62 87
b. Net Working Capital (Average Days) 48 46 69
c. Current Ratio (Current Assets / Current Liabilities) 2.0 1.6 1.5
3. Coverages
a. EBITDA / Finance Cost 9.8 7.0 8.3
b. FCFO / Finance Cost+CMLTB+Excess STB 8.3 5.6 7.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.1 0.1 0.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 17.9% 18.9% 26.4%
b. Interest or Markup Payable (Days) 32.5 34.8 47.6
c. Entity Average Borrowing Rate 10.9% 21.5% 6.2%

Oct-25

www.pacra.com

Guard Agricultural Research and Services (Pvt.) Limited

rating scale

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Oct-25

www.pacra.com

Guard Agricultural Research and Services (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
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  4. Independence & Conflict of Interest
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    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  5. Monitoring and Review
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    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
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  6. Probability of Default
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Oct-25

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