PACRA Maintains Entity Ratings of Sadiq Poultry (Pvt.) Limited
Poultry is one of the largest agro based segment in Pakistan, accounting both domestic & commercial poultry. With an investment of almost PKR 700 billion in FY18, industry had an annual growth of 10%. Pakistan is sufficient in poultry meat and egg production. However, lacks in per capita protein consumption remains low when compared to the world's average.
The ratings reflect Sadiq Poultry’s association with an established vertically integrated poultry group, named Sadiq Group. The company enjoys established profile in its business – broiler, chicken, eggs and day old chicks. It is a leading player in these segments. After significant expansion in capacities, margins improved as the management kept the cost under control and has economies of scale. Nevertheless, the Company remains exposed to volatility in prices and contingent health risk to its products (live chicken stock). Procuring feed in bulk from group’s own company creates synergies. The Company’s financial risk profile is characterized by moderate leverage and adequate coverages. The loan mix is skewed towards short term borrowings to meet working capital needs.
The ratings are dependent on the management's ability to prudently mange the business risk for of perishable consumer products, while sustaining business margins. Moreover, governance framework needs attention. Meanwhile, prudent management of working capital and maintaining strong coverages remain critical.
Sadiq Poultry (Pvt.) Limited is a successful parent venture of Sadiq Group; well-known player of Pakistan’s poultry industry. It was incorporated in 2004 and is primarily engaged in operating 21 poultry breeding units/farms, 80 broiler farms, laying units maintaining 2.1 million birds with commercial egg production capacity of 2 million from 4 poultry hatcheries. Company has its own livestock pharmaceutical setup, to ensure birds health.
Its present shareholding structure suggests that Dr. M. Sadiq, is man of the last mile, as he holds the major shares. Remaining stake resides with his two sons Mr. Asif Zubair and Mr. Salman Sadiq. Sponsoring family dominates the board of Sadiq Poultry and comprises five members. Board’s Chairman and company's CEO, Dr. Muhammad Sadiq, plays a pivotal role in making strategic decisions.