Welcon Chemicals (Pvt) Ltd ('Welcon' or 'the Company') is a private limited Company incorporated in 1994 under the Companies Act,2017.

Allahdin Group of Companies ('the Group') is among the leading players in the pesticide sector. During the 1980s, the sponsoring family was primarily engaged in the construction business. One of the four brothers was associated with the agriculture industry and had the relevant knowledge base required to enter the industry. The Company was subsequently established and paved the family’s path into the agriculture industry of Pakistan.

The Company's activities involve imports, formulations, manufacturing & marketing of all kinds of pesticides (Insecticides, Herbicides, Fungicides, Insect Growth Regulators), fertilizers and micronutrients (liquid & granules), plant growth regulators, seeds of different field crops & vegetables, etc. The Company's head office is located in Lahore. The formulation facility is at Industrial Estate Multan, which is equipped with Chinese machinery and technology. The Company operates through more than 1,000 dealers all across Pakistan.

The Company's ownership transitioned to the new generation. Mr. Zain Iftikhar Ch. possesses a majority shareholding of ~68%, followed by Ch. Zia ur Rehman with 15%, Ch. Iftikhar Nazir with 13%, Mr. Masood ur Rehman with 2%, and Ms. Ghazala Ghazni with a 2% stake.

Although there is no formal succession plan, the ownership of the Company rests among the family members.

The Company has a strong history of succeeding in agriculture. They have created synergies throughout Pakistan by using cutting-edge technology and providing one-of-a-kind services. The Group is equipped with people with vision, wisdom, and unique skills.

The Group's history dates back to the 1990s, and vested business interests in Agriculture, Bottling, and the Pharmaceutical industry. The Group will support the Company if need be.

The control of the Company is vested with a two-member Board comprising the CEO and a Director. Both members are actively involved in the operations of the Company. However, the final decision is approved by the Chairman of the Group.

All members have been with the organization for a long. Mr. Zain possesses significant knowledge, skillset, and over a decade of experience in the pesticide sector. He is the Chairman & Chief Executive Officer (CEO) of the Company.

The Board meets frequently, and minutes are documented as per the requirement. However, no Board committees exist to assist the Company's Board. 

The External Auditors of the Company, M/S. HLB Ijaz Tabussum & Co., Chartered Accountants, a "B" category QCR-rated firm, expressed an unqualified opinion on financial statements for the period ended FY24.

Business operations are divided into four key functions, namely: (i) Sales & Marketing, (ii) Finance, (iii) HR & IT, and (iv) Taxation & Accounts. The reporting lines converge to the CEO, who is the man at the last mile, i.e., the key decision maker.

Mr. Zain Iftikhar Ch. is the key shareholder and CEO of the Company and possesses the required knowledge, expertise, and skillset. He has been with the business for a long time and is assisted by a team of professionals.

Management meetings are conducted as and when required, and senior management contributes their insights to the decision-making process. Ch. Iftikhar Nazir serves as the ultimate authority in all decision-making matters. The Company does not have any formalized management committees in place.

The Company has built an in-house ERP system. It has all the required modules like inventory, sales & marketing, finance, procurement, HR, etc. It generates reports on a daily, weekly, and monthly basis.

The frequent meetings at the management level demonstrate that the Company's monitoring and evaluating systems are appropriate. The monthly and quarterly MIS reports of the Company include detailed segment and product performance data that is evaluated monthly by senior management.

The agricultural sector plays a pivotal role in Pakistan's economy, contributing ~25% to the GDP and serving as a crucial source of raw materials for various industries. The industry heavily relies on pesticides to enhance crop protection and cultivation practices (Agro Chemicals). The pesticide sector is significantly dependent on imports as ~85-90% of raw material is imported from China. In FY23, the pesticide industry's estimated value stood at ~PKR 103.7bln, marking a YoY increase of ~5.4%. This growth is attributed to the overall expansion of the crops sector and the subsequent rise in demand. Additionally, increased prices have further contributed to this upward trend. In FY23, pesticide imports reached around ~PKR 36bln, reflecting a ~19% YoY increase. Among these imports, insecticides accounted for the majority. The sector's overall leveraging remains moderate, with stable coverage ratios. Going forward, the sector's overall outlook is expected to remain stable.

The Group holds a strong market position and brand image in the industry.

The Company has maintained a healthy business risk profile backed by its established industry presence and robust sales network nationwide. The Company has diversified revenue streams from pesticides, generating ~68% of the revenue, followed by seeds (~17%) and fertilizer (~15%). During FY24, the revenue of the Company clocked at ~PKR 2,347mln (FY23: ~PKR 2,180mln), witnessing a slight increase of ~8%. During 6MFY25, the Company reported revenue of ~PKR 1,040mln. Improvement in revenue was majorly attributed to price changes in products. Going forward, revenues are expected to increase, given the Company's plan to sell its products in the wholesale market. 

In FY24, the Company's gross profits stood at ~PKR 426mln, marking a ~6.2% increase from FY23's ~PKR 401mln. The gross profit margin decreased to 18.1% in FY24 (FY23: ~18.4%), attributed to higher raw material prices. Operating profits surged to ~PKR 163mln in FY24 (FY23:~PKR 144mln), with the operating profit margin slightly increasing to ~6.9% (FY23: ~6.6%), indicating efficient administrative and selling expense management by the Company. An increase in taxes and finance costs during FY24 resulted in a net profit of ~PKR 29mln (FY23: ~PKR 131mln). Therefore, the Company's net margin dropped significantly to ~1.2% (FY23: ~6%). During 6MFY25, the Company reported a gross profit of ~PKR ~207mln and a net profit of ~PKR 29mln, with gross margin clocking at ~19.9% and a net margin of ~2.4%, respectively. Going forward, profits are expected to follow a similar trajectory. 

Going forward, the management will focus on sustaining its cost leadership and performance uptrend. The Company is securing its business by registering its farmers and providing them pesticides and in return purchasing their crops. The idea was implemented in the cotton and wheat segments. Moreover, the Company plans to sell its products in the wholesale market. 

As of FY24, inventory turnover days increased slightly to ~126 days (FY23: ~124 days) due to a decrease in demand, whereas trade receivable days increased significantly to ~65 days (FY23: ~44 days), demonstrating the Company's inefficiency in collecting receivables. Trade payable days improved slightly to ~15 days (FY23: ~13 days), highlighting the Company's ability to extend trade credit. Thus, the net working capital cycle witnessed a deterioration reported at ~176 days (FY23: ~155 days). As of 6MFY25, inventory days were reported at ~132 days, followed by trade receiveable days of ~83 days and trade payable days of ~8 days. Resultantly, net working capital days stood at ~207 days. The Company's borrowing cushion remains moderate. 

As of FY24, the FCFO of the Company stood at ~PKR 182mln (FY23: ~PKR 152mln) due to increased EBITDA. However, finance costs increased to ~PKR 82mln (FY23: ~PKR 79mln). Consequently, the Company's interest coverage ratio (FCFO / Finance Cost) improved to ~2.2x as of FY24 (FY23: ~1.9x). As of 6MFY25, the Company reported FCFO of ~PKR 97mln, whereas finance cost was reported at ~PKR 40mln, resulting in interest cover of ~2.5x. The Company consistently exhibits the capability to cover its interest expenses sufficiently. Looking forward, the Company anticipates that improved market dynamics will positively impact its Free Cash Flow from Operations (FCFO). Moreover, an incremental decrease in policy rates would further decrease finance costs.

The Company maintains a moderately leveraged capital structure with a ratio of ~32% as of FY24 (FY23: ~29%). The ratio has increased slightly due to an increase in total borrowings reported at ~PKR 718mln (FY23: ~PKR 607mln). Whereas the equity grows and stands at PKR~1,504mln (FY23: PKR 1,475mln) due to profit accumulation. As of 6MFY25, the leverage ratio was reported at ~20%, with total borrowings standing at ~PKR 382mln and equity of ~PKR 1,529mln.