Swat Agro Chemicals

CREDIT RATING REPORT | Nov-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
19-Nov-25 BBB A2 Stable Maintain -
29-Nov-24 BBB A2 Stable Upgrade -
21-Dec-23 BBB- A2 Stable Maintain -
21-Dec-22 BBB- A2 Stable Initial -
About the Entity

Swat Agro Chemicals ('Swat Agro' or 'the Business') was incorporated in 1996 as a partnership concern as per the Partnership Act, 1932. Ownership resides among three partners, where major stake (~50%) lies with Mr. Barkat Ali Khan. While, the remaining stake i.e. ~50 % is held equally by Ms. Fouzia Nazneen and Mr. Muhammad Alam Khan. Mr. Barkat Ali Khan heads the Business as the CEO, and is assisted by an experienced management team.

Rating Rationale

The assigned ratings of Swat Agro Chemicals ('Swat Agro' or 'the Business') drive strength from the sponsor's substantial experience within the pesticide industry. The Business maintains an established presence in the domestic market with a diverse product portfolio, encompassing insecticides, fertilizers, micronutrients, fungicides, household products, weedicides, adjuvants, and agri-equipment. Further rating support is derived from a key strategic collaboration with BASF and the successful operation of its state-of-the-art SC & EC formulation plant, complemented by ongoing strategic expansion initiatives in seed development, packaging, and the real estate segment. The Business's consistently maintained a sustainable risk profile, where the revenue mix is dominated by micronutrients (~28%), insecticides (~26%), and fertilizers (~24%). Despite a ~21% contraction in revenue, attributable to muted growth across the broader agricultural economy, the Business successfully maintained solid gross margins, translating into a stable bottom line. On the financial front, working capital needs are met through a prudent combination of internal cash flow and short-term credit facilities, supported by a notably low-leverage capital structure and robust debt coverage metrics, ensuring the overall business and financial risk is currently assessed as manageable. However, strengthening the governance framework, improving financial transparency through the induction of an SBP-panel auditor, and developing robust internal control mechanisms remain imperative to the ratings.

Key Rating Drivers

The ratings are dependent on Swat Agro's ability to sustain the operations, keeping the business and financial profile at an optimal level. Moreover, strict adherence to debt matrix along with maintaining cashflows and coverages at an adequate level remains imperative. This along with improved governance framework and internal controls would benefit ratings.

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

Swat Agro Chemicals

rating analysis

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Profile
Legal Structure

Swat Agro Chemicals ("Swat Agro" or "the Business") was incorporated in 1996 as a partnership concern under the Partnership Act, 1932.


Background

Mr. Barkat Ali, the founder, entered the business arena in the early 80s when he started to import pesticides for his farms, located in Swat, from the UAE. Later during the 90s, Mr. Barkat started selling pesticides through a formal channel and set up Swat Agro. Initially, the Business reach was up till Peshawar only. Over time, through expansionary activities, the Business expanded operations in Baluchistan and later into Punjab and Sindh.


Operations

Swat Agro is primarily engaged in the sale of pesticides, insecticides, fungicides, weedicides, micronutrients, plant growth regulators, and public health products. The distribution structure is divided into regions, zones, and territories comprising 6 supply chain centers nationwide. The formulation and packing plant for SC, EC & granular pesticides is situated near the city of Kasur. The facility of Swat Agro is equipped with high-quality processing units. It also has multiple warehouses throughout the country. Head office is located in Peshawar and the corporate office is in Lahore.


Ownership
Ownership Structure

Swat Agro's ownership is divided among three partners, where Mr. Barkat Ali Khan holds ~50% stake. The remaining share in the Business is held by Mr. M. Alam Khan (~25%) and Ms. Fozia Nazneen (~25%).


Stability

Ownership is expected to remain stable, going forward, as a considerable stake resides with Mr. Barkat. Moreover, second generation is gradullay been inducted into the Business; thus, further stregthening the overall stability.


Business Acumen

Mr. Barkat Ali, the founding partner, holds ~ 3 decades of professional experience in the pesticide sector. His exposure in local and international market as a dealer is expected provide synergies across overall operations of Swat Agro, going forward.


Financial Strength

The sponsors hold considerable nancial footing to support the Business, if needs be.


Governance
Board Structure

Swat Agro is not regulatory bounded to setup a formal Board of Directors (BoD). However, all the partners of the Business remain responsible for the operation and making pertinent decisions.


Members’ Profile

Swat Agro's partners -Mr. Barkat, Mr. Alam, and Mrs. Fauzia -are experienced professionals and have been involved in the Business since its inception. Mr. Barkat holds ~3 decades of experience in the pesticides sector.


Board Effectiveness

The partners are assisted by two committees, namely, the Core and Tax committees, for decision-making and policy formation of Swat Agro. The Core committee comprises the CFO and Manager Finance; while the Tax committee comprises the CFO, Head of Tax, Manager Finance. These committees meet as per requirement, while no formal minutes are documented.


Financial Transparency

M/s Dilroz Khan & Co. are the external auditors of the Business. The firm is not QCR rated; however, has expressed an unqualied opinion on the financial statements as of FY24.


Management
Organizational Structure

Swat Agro operates through four departments: Sales & Marketing, Administration, IT and Finance & Accounts. All departmental heads report to the Chief Operating Ofcer (COO), who then reports to the CEO.


Management Team

Mr. Barkat, the CEO, holds ~ 3 decades of professional experience in the local and international market as a dealer operating in the pesticide sector. Mr. Wajid Gul, the CFO, holds an overall experience of almost two decades and has been associated with the Business since 2009. The management team comprises seasoned professionals.


Effectiveness

Anticipating the need for enhanced management efcacy, there are envisaged plans of adding management-level committees, going forward. At present, the Business has no formal management committees in place.


MIS

The monitoring and reviewing mechanisms of Swat Agro require improvement. Currently, excel based weekly, monthly, and quarterly comprehensive reports of each segments and products performance are shared with the senior management.


Control Environment

Swat Agro has installed a technologically advanced ISO 9001 - 2015 and ISO 17025 - 2005 certied formulation plant. The Business requires a formal internal audit function for effective control and monitoring.


Business Risk
Industry Dynamics

Pakistan’s pesticides sector recorded a revenue of PKR ~118.9 billion in FY25, down ~4.6% YoY (FY24: PKR ~124.6 billion ). This is mainly attributed to low pesticides usage owing to lower cotton crop production i.e., ~7.1mln bales (FY24: ~10.2mln bales). In volumetric terms, pesticides imports stood at ~31,283MT in FY25 (FY24: ~37,253MT). The imports of Base Ingredients for Pesticides amounted to PKR~36,932mln (FY24: PKR~47,699mln). In FY25, Pakistan imported ~41.9% of pesticides from China, ~8.2% from South Korea, ~9.2% from USA ~7.4% from Germany, and ~4.0% from Singapore.


Relative Position

Swat Agro holds a market share of ~5% and is among the leading local players in the sector. While international players lead the sector.


Revenues

Swat Agro earns revenue mainly from micronutrients ~29%, followed by insecticides (~24%), fertilizers (~27%), fungicides (~13%), households (~2%), weedicides (~4%), and adjuvants & agri equipment (~1%). During FY25, the Business recorded a revenue of ~PKR 7.1 billion (FY24: ~PKR 8.9 billion), depicting a decrease of ~20%, due to lower sales volume and pricing pressure. Going forward, revenue growth is expected to remain modest in the near term, contingent upon demand recovery in the agriculture sector and stabilization in input costs.


Margins

Business margins remained under pressure for Swat Agro. During FY25, gross margin decreased to ~33% (FY24: ~44%) due to an increase in cost per unit. Similarly, operating margin declined to ~15% (FY24: ~27%) owing to the trickle-down impact of higher input costs. On a net level, margins contracted to ~15% during FY25 (FY24: ~27%), primarily driven by elevated finance costs. Going forward, margins are expected to remain constrained amid a challenging cost environment.


Sustainability

Going forward, the sponsors are expanding operations by adding new business lines like packaging plants and are expanding their footings in the real estate segment.


Financial Risk
Working capital

Swat Agro manages its working capital through a mix of short-term borrowings and internal cash generation. As of FY25, net working capital days witnessed a significant deterioration (FY25: 271 days, FY23: ~156 days), primarily due to higher trade receivable days (FY25: ~135 days, FY23: ~82 days) and inventory days (FY25: ~191 days, FY23: ~111 days). Conversely, trade payable days improved (FY25: ~55 days, FY23: ~36 days) as the company was able to better negotiate terms with its suppliers. The Business maintains a stable borrowing cushion (FY25: ~75%, FY24: ~73%), providing adequate financial flexibility to support short-term funding requirements despite the extended working capital cycle.


Coverages

The Business maintains a strong liquidity profile, evident from an interest coverage ratio of ~45x as of FY25 (FY24: ~98x). However, Free Cash Flows from Operations (FCFO) witnessed a significant decrease (FY25: ~PKR 1.1bln, FY24: ~PKR 2.4bln), which adversely impacted coverage metrics. The total finance cost remained stable (FY25: ~PKR 26mln, FY24: ~PKR 25mln). Going forward, liquidity sustainability will remain contingent upon the recovery of operational cash flows and prudent working capital management.


Capitalization

Swat Agro maintains a robust capital structure, evident from the debt-to-equity ratio of ~8% as of FY25 (FY24: ~9%). As of FY25, the Business's equity stood at ~PKR 6.3 billion (FY24: ~PKR 5.8 billion), reflecting a solid equity base. Short term borrowings are used to manage the working capital requirements and stood at ~PKR 555mln as of FY25 (FY24: ~PKR 565mln). Looking ahead, the Business remains able to post sustained level of leveraging.
 
 

Nov-25

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Swat Agro Chemicals

financial summary

(PKR mln)

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Jun-25
12M		 Jun-24
12M		 Jun-23
12M
Audited Audited Audited
A. BALANCE SHEET
1. Non-Current Assets 1,281 1,185 1,068
2. Investments 0 0 0
3. Related Party Exposure 0 0 0
4. Current Assets 6,947 6,328 3,756
a. Inventories 3,892 3,549 1,909
b. Trade Receivables 2,829 2,454 1,565
5. Total Assets 8,228 7,513 4,824
6. Current Liabilities 1,327 1,122 802
a. Trade Payables 1,146 1,008 785
7. Borrowings 555 565 315
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 0 0 0
10. Net Assets 6,346 5,826 3,707
11. Shareholders' Equity 6,346 5,826 3,707
B. INCOME STATEMENT
1. Sales 7,119 8,987 5,613
a. Cost of Good Sold (4,781) (5,063) (3,534)
2. Gross Profit 2,338 3,924 2,079
a. Operating Expenses (1,254) (1,533) (1,004)
3. Operating Profit 1,084 2,391 1,076
a. Non Operating Income or (Expense) 69 67 26
4. Profit or (Loss) before Interest and Tax 1,153 2,458 1,101
a. Total Finance Cost (83) (60) (74)
b. Taxation 0 0 0
6. Net Income Or (Loss) 1,071 2,398 1,027
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 1,163 2,477 1,106
b. Net Cash from Operating Activities before Working Capital Changes 1,163 2,477 1,106
c. Changes in Working Capital (465) (2,203) (543)
1. Net Cash provided by Operating Activities 698 274 563
2. Net Cash (Used in) or Available From Investing Activities (189) (197) (157)
3. Net Cash (Used in) or Available From Financing Activities (597) (17) (343)
4. Net Cash generated or (Used) during the period (88) 60 63
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -20.8% 60.1% 30.6%
b. Gross Profit Margin 32.8% 43.7% 37.0%
c. Net Profit Margin 15.0% 26.7% 18.3%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 9.8% 3.0% 10.0%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 17.6% 50.3% 31.0%
2. Working Capital Management
a. Gross Working Capital (Average Days) 326 192 206
b. Net Working Capital (Average Days) 271 156 160
c. Current Ratio (Current Assets / Current Liabilities) 5.2 5.6 4.7
3. Coverages
a. EBITDA / Finance Cost 45.4 97.8 33.1
b. FCFO / Finance Cost+CMLTB+Excess STB 16.8 76.7 21.2
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.1 0.0 0.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 8.0% 8.8% 7.8%
b. Interest or Markup Payable (Days) 0.0 0.0 0.0
c. Entity Average Borrowing Rate 4.6% 5.9% 7.8%

Nov-25

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Swat Agro Chemicals

rating scale

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Nov-25

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Swat Agro Chemicals

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
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    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))
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