November 2, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Shabbir Feed Mills (Pvt.) Limited at ‘BBB-’ for long term and ‘A3’ for short term, with a ‘stable’ outlook forecast.
According to the rating agency, the ratings reflects Shabbir Feed Mills strong presence in Southern Punjab in its related fields – poultry feeds, broiler meat and table eggs.
During FY18, the Company's topline witnessed a decline underpinned by volatile demand in the poultry industry. However, procuring raw materials – maize, at low cost benefited the margins.
The Company's long working capital cycle is due to seasonal nature of inputs that leads to longer holding period. The Company operates with high leveraging, primarily in the form of short-term borrowings, to fund the inventory and advances/financial support to other group companies. This led to a stressed financial profile due to increased borrowings that stressed the coverages.
Furthermore, the ratings are dependent on the management's ability to build profitable volumes while maintaining its margins. Financial discipline is crucial. Improvement in the debt mix and better coverages will benefit the ratings. Meanwhile, strengthening of governance framework would be positive for the ratings.
Shabbir Feed Mills (Pvt.) Limited, is an established venture of Shujabad Group. The Company was incorporated in 2001 and is primarily engaged in manufacturing and selling poultry feeds,table eggs and broiler meat. The Company's feed mill, located in Multan, has a manufacturing capacity of 45 MT per hour.
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