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PACRA Assigns Initial Entity Ratings to Hi-Tech Feeds (Private) Limited

Date: January 15, 2019 Author: newsfeed.pk Category: General General Business News Tags: Short URL Comments: 0

Lahore, January 15, 2019 (PPI-OT): Among the largest agro based segments in Pakistan, poultry holds a prominent place. In Pakistan, formal feed manufacturing started in early 1960. With 350 poultry feed mills and home mixtures, the country annually produces around 8 MMT of poultry feed. This industry directly derives its demand from poultry – chicken and eggs consumption. With growing income levels and expanding population, the industry is experiencing ~ 4 to 5% growth.

The ratings reflect Hi-Tech Feeds (Pvt.) Limited association is with an established poultry group, Hi-Tech Group. The Company enjoys a moderate market share and is considered to be a quality producer with good Feed Conversion Ratio. However, it has been experiencing declining turnover due to an increase in the efficiency of poultry feed and higher competition as many small players have entered the market.

The margins remain on the lower side when compared to peers. The Company’s margins are dependent on timely purchase of key raw materials, which leads to higher working capital requirement. Therefore leveraging is characterized as high, consisting of short-term borrowings only, to fund the inventory and provide financial support to other Group Companies. The Company’s coverages remain stressed.

The ratings are dependent on the management’s ability to build profitable volumes while improving its margins. Financial discipline remains crucial. Envisaged improvement in business and financial profile along with strengthening of governance framework would be beneficial. Any further deterioration in margins and/or coverages will have negative impact on ratings.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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