Waheed Hafeez (Pvt.) Limited (‘the Company’) was incorporated in September 1993 as a Private Limited Company.

Mr. Sheikh Abdul Waheed, founder of Waheed Group of Industries (‘the Group’) started his business journey in the tea industry in the 1970s. Later, in 1988 he entered the edible oil industry The Group's significant combined production capacity, exceeds 850 million tons per day for vegetable ghee and edible oil. In 1993, the Group started its first venture Waheed Hafeez Ghee Industries (Pvt.) Limited in Hattar, KPK which currently has the capacity to produce 350. The company generates an annual turnover of over three hundred and fifty million US Dollars ($350 million), contributing significantly to the country’s economy. MT per day of vegetable oil/ghee. Waheed Group of Companies is also one of the largest entities in the field of manufacturing and import of edible oil, bulk import and distribution of Crude Palm Oil, RBD Palm Oil, RBD Palm Olein, import of various food industry chemicals, Electrolytic Tinplate Sheets, import and sale of Compressed Natural Gas (CNG) Equipment and Stations, running of (CNG) Filling Stations, and Real Estate and construction of Commercial Buildings. The group also deals in shortening.Additionally, Waheed Group of Companies maintains a presence in the hospitality industry with its hotel venture, ‘Laraib Inn’. Demonstrating a commitment to agricultural diversification and local development, the group has recently invested in olive farming, acquiring over 1000 acres of land for this purpose.

1. The Company is primarily engaged in the process of refining crude palm oil; producing and selling cooking oil/ghee. Capacity utilization is dependent on the local demand and availability of crude palm oil which is primarily imported from Malaysia and USA.  It has a production capacity of 350 metric tons per day, produced under 44 different brands that comply with the different needs of various clients.

The Company’s majority ownership resides with family sponsors with Mr. Abdul Waheed (~90%) and his wife Ms. Rubina Kausar (~10%), reflecting a family-owned governance model.

The Company is completely owned by the sponsoring family through associated company and individual shareholding. The company is one of the largest suppliers of cooking oil and banaspati in northern Pakistan, reflecting its significant market presence. Waheed Hafeez Ghee Industries has established a stable and growing presence in Pakistan's edible oil industry through strategic expansions, strong financial performance, and a commitment to quality. The Company's affiliation with Waheed Group underscores its operational stability.

Mr. Abdul Waheed has been associated with the edible oil industry from almost 40 years. He started his career in the tea industry and later entered the edible oil industry by establishing his own cooking oil/ghee production units and companies. Apart from edible oil, the sponsors also have presence in the transport, hotel, and energy sectors as well. The Group has also formed consultancy firm in Canada. Mr. Waheed has also served as the chairman Pakistan Banaspati Manufacturer’s Associated for 3 years. Furthermore, he is currently the member of Rawalpindi Chamber of Commerce, Federation of Pakistan Chamber of Commerce & Industry (FPCCI), and SAARC Chamber of Commerce.

The Group is predominantly composed of Companies engaged in various aspects of the edible oil value chain, reflecting a focused and vertically integrated business model. Beyond the inherent financial strength of the Group, the sponsoring family holds considerable personal net worth. This financial capacity positions them to extend timely support to the Company, should adverse economic or industry-specific challenges arise, thereby enhancing the Company's financial resilience and credit profile.

The Company’s BoD comprises two Executive Directors and both directors are from the sponsoring family. Lack of independent oversight and diversity indicates a room for improvement in the Company’s governance structure.

The BoD is a key source of oversight and guidance for the management of all Group Companies. The Board’s Chairman, Mr. Abdul Waheed has been associated with the edible oil industry from almost 40 years.  He has also served as the chairman Pakistan Banaspati Manufacturer’s Associated for 4 years. Furthermore, he is currently the member of Rawalpindi Chamber of Commerce, Federation of Pakistan Chamber of Commerce & Industry (FPCCI), Haripur Chamber of Commerce & Industry (HCCI) and SAARC Chamber of Commerce. Ms. Rubina Kausar, serves as the Non-Executive Director on the Board and has an overall experience of 17 years.

The Board's current practice of informal discussions on pertinent matters, alongside the absence of formal sub-committees, indicates a less formalized structure for corporate governance. While this approach may foster open dialogue and operational flexibility, it could potentially limit the depth of analysis and specialized oversight typically provided by dedicated sub-committees for critical areas such as audit, risk management, and remuneration. The establishment of formal Board sub-committees with clearly defined responsibilities and reporting lines could enhance the rigor and focus of governance processes, thereby strengthening overall board effectiveness.

The external auditors of the Company, Nasir Javaid Maqsood Imran Chartered Accountants, have expressed an unqualified opinion on the financial statements of the Company for the year ended Jun-24. The firm has been QCR-rated by ICAP and is placed in ‘category B’ of SBP’s panel of auditors

The organizational structure has been optimized as per the operational needs. The Company operates through three functions: Production, Finance, Distribution and Sales. All functional managers’ report to the Company’s CEO. The CEO makes all pertinent decisions of the Group. As the Company’s CEO is responsible for the whole unit, thus highlighting the key man risk of management.

The overall control of the Company vests with Board’s Chairman, who is also the Group’s Chief Executive Officer. Hence, there is no segregation of responsibilities. Mr. Abdul Waheed has been associated with the edible oil industry from almost 40 years. He started his career in the tea industry and later entered the edible oil industry by establishing his own cooking oil/ghee production units and companies. Apart from edible oil, the sponsors also have presence in the transport, hotel, and energy sectors as well. The Group has also formed consultancy firm in Canada. Mr. Waheed has also served as the chairman Pakistan Banaspati Manufacturer’s Associated for 4 years. Furthermore, he is currently the member of Rawalpindi Chamber of Commerce, Federation of Pakistan Chamber of Commerce & Industry (FPCCI), and SAARC Chamber of Commerce.

The absence of formal management committees within the Company represents an area for potential development in its organizational structure and governance framework. Management committees, when effectively implemented, can enhance decision-making processes, improve cross-functional collaboration, and provide dedicated oversight on critical aspects of the business, such as operations, finance, and strategy.

The implementation of SAP Business One as the Company's enterprise resource planning (ERP) system is a significant enabler for generating standardized reports. This suggests a commitment to leveraging technology for efficient data management and reporting processes. The use of a recognized ERP system like SAP Business One typically facilitates better integration of various business functions, leading to more accurate, consistent, and timely information for decision-making. The ability to generate standard reports enhances transparency, supports regulatory compliance, and provides management with valuable insights into the Company's performance across different operational areas. This foundation of standardized reporting is crucial for effective monitoring, analysis, and strategic planning.s.

The Company benefits from an in-house internal audit department, which is a positive aspect of its governance structure. This dedicated function, headed by Ms. Abeera Hamid, suggests a commitment to internal controls, risk management, and operational efficiency. An internal audit department plays a crucial role in independently assessing and improving the effectiveness of the organization's processes, ensuring compliance with policies and regulations, and safeguarding assets. The presence of such a department can contribute to stronger financial reporting and overall corporate governance.

Edible oil is one of the highest imported commodities in Pakistan. During the year, 2.717 million tonnes of edible oil (including oil extracted from imported oilseed) of value Rs 794 billion was imported. Local edible oil production remains at 0.471 million tonnes. In line with population growth, edible oil demand is forecast to grow about 5% and palm oil imports grew accordingly, reaching 3.6mln tons in FY24. The price of Soybean oilseed stood at 479 USD/MT in Jun-24 as compared to 591 USD/MT in the comparative year, showcasing a decrease of ~18%. On the other hand, the price of palm oil stood at 873 USD/MT in Jun-24 and 816 USD/MT in Jun-23, which is forecasted to ease further. Comparatively reductions in selling prices have impacted the revenues substantially for the refineries. Due to the rise in input costs, especially raw material cost, many companies have experienced a reduction in their profit margins and faced working capital shortages. With expectations for better cottonseed production, Total oilseed production in 2024/25 is projected to decrease marginally to 3.43 million tons, due to an expected minor decline in cottonseed production, and no growth in rapeseed and sunflower seed output. The industry's future outlook is developing due to price volatility and PKR depreciation.

The Company being a small player in the edible oil industry of the country, Waheed Hafeez Ghee Industries (Pvt) Ltd holds a strong and competitive position within Pakistan’s edible oil and banaspati industry, particularly in the northern region.

During FY24, the Company’s revenue significantly increased YoY. The Company's topline posted a growth of ~21% and reported at ~PKR 6.7bln during FY24 (FY23: ~PKR 5.6bln) owing to significant demand of soybean seed and increased prices. Revenue growth was driven by contributions from both domestic and export sales. During FY24, revenue from local sales stood at PKR ~7.8bln and revenue from export sales stood at PKR ~0.136bln (FY23: PKR ~6.55bln and PKR ~0.046bln) respectively. Going forward, revenues is expected to follow similar trend due to inflationary pressure. The company produces over 44 different brands of edible oils and fats, catering to various market segments. Some of their major brands include: Fauji Supreme, Perlli, Phool, Zeenat.

The Company faces foreign currency risk due to its reliance on imported RBD Palm Olein from Malaysia, where price volatility is influenced by supply and demand dynamics. This exposure likely contributed to the decrease in gross profit margin to 6% in FY24 from 7.1% in FY23, as increased raw material costs. Operating profit margin also experienced a slight decline to 4.6% in FY24 (FY23: 4.7%), suggesting some inefficiency in managing operating expenses further compressed profitability. The net profit margin saw a minor reduction to 2.1% in FY24 (FY23: 2.4%), primarily driven by a slight increase in financial charges. In summary, the Company's profitability was negatively impacted by rising raw material costs stemming from its import dependency and foreign currency exposure. Additionally, operational inefficiencies and increased financial charges further contributed to the lower net profit margin in FY24. Managing foreign currency risk, optimizing raw material sourcing, and improving operational expense control will be crucial for enhancing future profitability.

Since its inception, the Company has exhibited a consistent growth trajectory. Building upon this foundation, the Company now possesses a heightened drive towards future expansion, underpinned by a clearly defined strategic direction within the industry-specific ecosystem.

The Company experienced a deterioration in its working capital management during FY24 compared to FY23. The increase in inventory days from 8 to 11 suggests a slower turnover of finished goods, potentially indicating inefficiencies in sales or inventory control. Similarly, the rise in receivable days from 15 to 18 days implies a longer collection period for outstanding payments, tying up cash. Consequently, the gross working capital days increased from 23 to 30 days, reflecting a longer operating cycle. This is further compounded by a decrease in payable days from 13 to 8 days, indicating the company is paying its suppliers more quickly, which, while potentially beneficial for supplier relationships, strains cash flow when combined with slower inventory turnover and longer receivable collection. The net effect of these changes is a significant increase in net working capital days from 10 to 22, signaling a potential liquidity strain as more funds are locked up in the operating cycle. The increased reliance on short-term borrowing has stretched the short-term trade leverage. While the total trade leverage also increased, the underlying components of working capital suggest a need for closer attention to inventory management, credit policies, and supplier payment terms to improve cash flow and overall working capital efficiency.

The Company demonstrates a robust improvement in its ability to cover interest expenses, as indicated by the substantial 31.2% growth in free cash flows during FY24, reaching PKR 193 million (FY23: PKR 147 million). This positive trend in free cash flow generation, a significant turnaround from the 4.7% decrease in the previous year, underscores enhanced operational efficiency and cash management. Notably, the Company incurred no finance costs in either FY24 or FY23. Consequently, the interest coverage ratio remains exceptionally strong, effectively infinite, as there are no interest obligations relative to the generated free cash flows. This absence of finance costs provides the Company with significant financial flexibility and reduces its vulnerability to interest rate fluctuations. The healthy growth in free cash flows, coupled with zero finance costs, positions the Company favorably in terms of debt servicing capacity and overall financial strength.

As of FY24, the Company exhibits a conservative capital structure, with a debt-to-equity ratio of 19.2%. Notably, 100% of the Company's total debt, which increased significantly to PKR 458 million in FY24 (FY23: PKR 221 million), is comprised of short-term borrowings. This heavy reliance on short-term debt exposes the Company to potential refinancing risks and fluctuations in short-term interest rates. Despite the increase in total debt, the Company's equity base also expanded to PKR 1,926 million in FY24 (FY23: PKR 1,785 million), contributing to the contained debt-to-equity ratio. However, the exclusive use of short-term debt to finance operations and growth strategies necessitates careful management of working capital and cash flows to ensure timely repayment and mitigate potential liquidity pressures. A more balanced debt portfolio with a mix of short-term and long-term financing could provide greater financial stability.