Sayban International

CREDIT RATING REPORT | Nov-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
28-Nov-25 BBB- A2 Stable Maintain YES
20-Dec-24 BBB- A2 Stable Maintain -
22-Dec-23 BBB- A2 Stable Maintain -
31-Dec-22 BBB- A2 Stable Upgrade -
23-Nov-22 BBB- A3 Positive Maintain -
About the Entity

Sayban International ("Sayban" or "the Business") was incorporated in 2005 as a partnership concern. Previously, the shareholding vested among Mr. M. Azam Cheema, Mr. Shamsher Hussain, and Mr. M. Tariq. However, recently, Mr. Shamsher and Mr. M. Tariq have divested their stake in the Business. Now, the partnership resides between Mr. M. Azam (~98%) and his wife, Mrs. Shabana Mumtaz (~2%). Mr. M. Azam is the key decision-maker for the Business and heads it as the CEO. He is supported by a team of experienced professionals.

Rating Rationale

The ratings assigned to Sayban International (“Sayban” or “the Business”) reflect the sponsors’ extensive experience in the pesticide industry, a strong brand franchise, an established market position, and a broad geographic footprint within Pakistan. However, the Business requires improvement in financial transparency. The domestic pesticide sector has recently faced significant challenges due to the absence of supportive government policies and the adverse impact of floods, which have collectively weighed on the yields of major crops. Notwithstanding these challenges, Sayban has successfully maintained its market share. Sayban’s revenue profile is diversified across pesticides (~79%), plant growth regulators and micro-nutrients (~10%), seeds (~7%), and fertilizers (~4%). Although the top line declined by ~11%, it remains at a sound level, supported by a robust nationwide sales network, with margins and profitability staying intact. The Business funds its working capital requirements through a combination of internal cash flows and short-term borrowings. Consequently, its financial risk profile has remained stable, underpinned by a moderately leveraged capital structure and strong coverage metrics. Currently, the Business is undergoing a structural transition, as Mr. Shamsher Hussain and Mr. M. Tariq are diluting their equity stakes. Post settlement with the retiring partners, the ownership of the Business rests with Mr. M. Azam Cheema and his family. This change is expected to elevate leverage going forward. The exact terms of the restructuring, as well as its timely and successful execution, are critical considerations. In view of these evolving dynamics, PACRA has placed the maintained entity ratings on Watch.

Key Rating Drivers

The ratings are dependent on the sustained business and financial risk profile of the Business. Meanwhile, improvement in governance practices would be beneficial for the ratings.

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

Sayban International

rating analysis

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Profile
Legal Structure

Sayban International ("Sayban" or "the Business") is an Association of Persons (AOP), established in 2005.


Background

Sayban was established under the umbrella of Auriga Group back in 2005. The Business was established and controlled by five major partners and two minority stakeholder partners. The partners decided to separate businesses in 2015, as a result of which the Sayban Group ('the Group') was formed. Three partners moved to Sayban Group, including Mr. M. Azam Cheema, Mr. Shamsher Hussain, and Mr. M. Tariq, and the remaining continued holding a stake in Auriga Group. Sayban was also transferred to Sayban Group. On legal grounds, however, these restructuring changes remained in process since then, and the Group continued to operate under the former unchanged partnership deed till Oct-19 when a separation agreement was formalized amongst the partners. At the end of 2024, the Group again went into restructuring, where Mr. Shamsher Hussain and Mr. M. Tariq segragated and Mr. Azam Cheema gained the stake in Sayban and Sayban Zarai Markaz. Mr. Shamsher became the sole owner of Comega Life Sciences and INNOVA Agri, whereas Mr. Tariq operates a completely seperate business.


Operations

The industrial complex based at Sayban includes production facilities for Fungicides, Granules, Herbicides, Insecticides, Plant Growth Regulator (Bio Fertiliser) and Hybrid Seeds. Sayban is doing research & development on different types of bacteria that are environmentally friendly and is involved in the formulation and sale of Pesticides, manufacturing of PGR (Bio Fertiliser), and the sale of hybrid seeds. It has a widespread distribution network nationwide. During the course of time, Sayban’s franchise network has grown to 499 shops, which are backed by an experienced & qualified sales team of permanent & contractual personnel.


Ownership
Ownership Structure

Currently, Mr. M. Azam Cheema and his wife, Mrs. Shabana Mumtaz, own the Business with ~98% and ~2% stake, respectively. Previously, the Business was owned by three partners, Mr. M. Azam Cheema, Mr. Shamsher Hussain, and Mr. M. Tariq. However, recently, Mr. Shamsher and Mr. M. Tariq have separated from the Business. The settlement of this transition is still in progress. 


Stability

The ownership remains stable, with the majority of the stake with Mr. M. Azam Cheema. Going forward, there will be a gradual induction of secomd generation into the Business.  



Business Acumen

Mr. M. Azam has been associated with the agriculture sector for a long time, bearing a strong educational background and deploying valuable services for over three decades.


Financial Strength

Under the umbrella of an agricultural group, Sayban aims for a strategic transformation, unlocking potential opportunities in its financial landscape.


Governance
Board Structure

Sayban currently operates under a partnership structure without a formal board. The Business is managed by two partners who are directly involved in its day-to-day operations. The existence of independence through the formation of a Board will be beneficial in streamlining operations and policy-making.


Members’ Profile

Mr. M. Azam Cheema holds a Master’s in Agriculture and Agronomy and has vast professional experience. He is the Chairman & the Chief Executive Officer of Sayban.


Board Effectiveness

Sayban’s oversight function – which is normally the role of the Board – is being exercised by Mr. M. Azam Cheema. Multiple roles of partners in the management reflect a lack of autonomous direction.


Financial Transparency

Awan & Co. Chartered Accountants are the External Auditors of Sayban. The audit of financial statements for FY25 is in progress. The external auditor is not a QCR-rated firm.  


Management
Organizational Structure

Sayban has a well-demarcated organizational structure with defined functions including (i) Operations, (ii) Finance & Accounts, (iii) Administration & HR, (iv) Procurement, (v) Development (vi) Marketing, (vii) R & D and (viii) Internal Audit, and (ix) Quality Control. All departmental heads report to the CEO, who then makes pertinent decisions. The CEO is the man at the last mile.


Management Team

Sayban has an experienced management team; a balanced blend of professional people from the industry. The majority of the senior management has been associated with Sayban for a long time. Mr. Aslam Javed, the Group CFO post-restructuring, and Mr. Anees-ur-Rehman Malik (GM Corporate), a finance expert with 25 years of experience in the Pharma, Sugar, Steel, and Pesticides sectors, have played pivotal roles in the Business.


Effectiveness

The absence of formal partner committees and the concentration of reporting lines to the CEO suggest a lack of organizational effectiveness in the Business's structure.


MIS

Sayban has deployed an M/s Genie Clique, a general customized software, particularly for pesticides, along with a real-time management base. However, further improvement in the system will bring more efficacy to the business processes.


Control Environment

The existence of an in-house internal audit department reporting directly to the CEO indicates an informal culture within the Business, potentially impacting its control environment.


Business Risk
Industry Dynamics

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 ~71% of raw material is imported, with the majority (~42%) from China. In FY25, the pesticide industry's estimated value stood at ~PKR 118.9bln, marking a YoY decline of ~4.6%. This decline is attributed to the low pesticide usage owing to lower cotton crop production i.e., ~7.1mln bales (FY24: ~10.2mln bales). In FY25, pesticide imports reached ~PKR 43bln, reflecting a ~22.5% YoY decrease. The sector's overall leveraging remains adequate with stable coverage ratios. Going forward, the sector's overall outlook is expected to remain stable.


Relative Position

Sayban holds a market share of 4% in the pesticide industry and is the pioneer of introducing micro fertilizer, with the brand name "Charger", a unique yet value-adding product in the fertilizer segment of the country.


Revenues

The Business has a diversified product mix including pesticides, fertilizers, micronutrients, and seeds. Pesticides generated ~79% of the total sales, followed by micronutrients (~10%), seeds (~7%), and fertilizers (~4%). During FY25, the Business generated revenue of ~PKR 5bln (FY24: ~PKR 5.7bln), a decrease of ~11% due to decreased demand from farmers as they could not generate good returns on wheat and rice crops. Going forward, revenue is expected to witness a declining trajectory, considering the impact of floods.


Margins

During FY25, the Business witnessed an uptick in gross margins reported at ~26.1% (FY24: ~25.5%) due to a reduction in the cost of manufacturing. However, operating margin reduced to ~11.5% (FY24: ~12.8%) due to an increase in administrative expenses. On the net level, the Business witnessed a slight decline in margin reported at ~6% (FY24: ~6.2%) due to a decrease in other income. Going forward, margins are expected to remain stable. 


Sustainability

Sayban is exploring new technical-grade pesticides to enhance scale and profitability. The Business is currently undergoing an ownership transition with two of the partners diluting their stake. The modalities of this restructuring, along with its timely and successful completion, are important; hence, PACRA assigns a Watch to the maintained entity rating. 


Financial Risk
Working capital

Sayban’s working capital cycle links to the crop seasons of the country. Optimal inventory management remains the key to a sound working capital system. During FY25, the inventory days deteriorated due to a decrease in demand, reported at ~173 days (FY24: ~166 days). The trade receivable days deteriorated to ~101 days (FY24: ~66 days), due to extended credit provided by the Business to the farmers. Moreover, trade payable days declined to ~33 days (FY24: ~43 days), demonstrating timely repayment to suppliers. The combined impact of inventory days, receivable days, and payable days resulted in a net working capital cycle of ~242 days (FY24: ~189 days). Borrowing cushion remained moderate. Going forward, working capital days are expected to remain stable.


Coverages

The Business reported a Free Cash Flow from Operations (FCFO) of ~PKR 769mln in FY25 (FY24: ~PKR 863mln), due to a decrease in profit before tax. The finance cost witnessed a decline of ~29% reported at ~PKR 241mln (FY24: ~PKR 339mln). resulting in an improved FCFO/finance cost coverage of ~3.2x (FY24: ~2.5x). Going forward, coverage is expected to remain stable.


Capitalization

Sayban increased its leverage in the capital structure, with the leverage ratio standing at ~37% (FY24: ~21%) due to an increase in borrowings. Total borrowings, including borrowings from related parties, of the Business stood at ~PKR 1.73bln (FY24: ~PKR 811mln), whereas shareholders’ equity stood at ~PKR 2.9bln (FY24: ~PKR 3bln), a decline due to a decrease in profits and share capital. Going forward, with the settlement of the ongoing restructuring, equity is expected to dillute by ~55% and hence lead to an inflated leveraging ratio.
 
 

Nov-25

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Sayban International

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 1,408 1,066 1,221
2. Investments 0 0 0
3. Related Party Exposure 0 0 0
4. Current Assets 4,470 4,493 3,697
a. Inventories 2,244 2,594 2,604
b. Trade Receivables 1,424 1,398 664
5. Total Assets 5,878 5,559 4,918
6. Current Liabilities 1,170 1,694 1,296
a. Trade Payables 313 597 743
7. Borrowings 1,662 747 1,194
8. Related Party Exposure 73 64 22
9. Non-Current Liabilities 0 0 0
10. Net Assets 2,974 3,054 2,407
11. Shareholders' Equity 2,974 3,054 2,407
B. INCOME STATEMENT
1. Sales 5,094 5,717 6,266
a. Cost of Good Sold (3,763) (4,258) (4,881)
2. Gross Profit 1,332 1,459 1,385
a. Operating Expenses (746) (727) (706)
3. Operating Profit 586 732 679
a. Non Operating Income or (Expense) 33 50 84
4. Profit or (Loss) before Interest and Tax 619 782 763
a. Total Finance Cost (250) (352) (392)
b. Taxation (64) (78) (78)
6. Net Income Or (Loss) 305 352 293
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 769 863 842
b. Net Cash from Operating Activities before Working Capital Changes 518 511 428
c. Changes in Working Capital (546) (290) 259
1. Net Cash provided by Operating Activities (27) 221 687
2. Net Cash (Used in) or Available From Investing Activities (33) (4) (34)
3. Net Cash (Used in) or Available From Financing Activities 7 (152) (655)
4. Net Cash generated or (Used) during the period (53) 65 (2)
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -10.9% -8.8% 119.1%
b. Gross Profit Margin 26.1% 25.5% 22.1%
c. Net Profit Margin 6.0% 6.2% 4.7%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 4.4% 10.0% 17.6%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 10.1% 12.9% 12.9%
2. Working Capital Management
a. Gross Working Capital (Average Days) 274 232 165
b. Net Working Capital (Average Days) 242 189 138
c. Current Ratio (Current Assets / Current Liabilities) 3.8 2.7 2.9
3. Coverages
a. EBITDA / Finance Cost 3.5 2.8 2.8
b. FCFO / Finance Cost+CMLTB+Excess STB 3.2 2.5 2.5
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 1.0 0.2 0.4
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 36.8% 21.0% 33.5%
b. Interest or Markup Payable (Days) 0.0 0.0 0.0
c. Entity Average Borrowing Rate 19.5% 33.6% 19.7%

Nov-25

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Sayban International

rating scale

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Nov-25

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Sayban International

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
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    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))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    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))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    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))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Nov-25

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