The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Upgrades Entity Rating of Sayban International

Rating Type Entity
(31-Dec-22 )
(23-Nov-22 )
Action Upgrade Maintain
Long Term BBB- BBB-
Short Term A2 A3
Outlook Stable Positive
Rating Watch - -

The assigned ratings of Sayban International ("Sayban" or "the AOP") take into account the extensive experience of the sponsors in pesticide industry, strong brand, established industry presence and wide geographical reach in the domestic market. The AOP retains its market share despite fragmentation in the crop protection industry and uncertainties at the economic and agricultural levels. The AOP has maintained a healthy business risk profile backed by its established industry presence, introduction of new products in the domestic market and robust sales network across the country. The AOP is one of the leading players in the Pesticides segment and has laid the milestone of introducing ‘Bio Fertilizers’ in Pakistan. The AOP has diversified revenue streams with i) Pesticides ii) Plant Growth Regulators, iii) Bio Fertilizers, iv) Seeds and (v) Standard Fertilizers . This helped generate revenue over the years while creating diversity in the revenue stream. The sponsors also have set up other companies to expand their agricultural presence, one of which is a pesticides business - Comega Life Sciences (Pvt.) Ltd. Going forward, the Group plans to acquire Sayban International through a newly formed entity, Sayban Zarai Markaz (Pvt.) Ltd. The upgrade rating of Sayban International factors in comfort prospective in the overall financial risk profile of the AOP characterized by the sustained growth in operating income and improved profitability during 6MCY22. Sayban meets its working capital requirements through a mix of internal cash flows and short-term borrowings. The financial risk profile remains comfortable owing to the continuously decreasing leveraged capital structure and strong coverages. The heavy rainfalls and recent floods have severely impacted the pesticides sector, posing to business risk. Pakistan's agriculture sector suffered massive losses as Surplus or inadequate rains and floods have devastated major crops. However, the Company was able to mitigate this risk on account of an efficient procurement strategy and augmented business concentration in Punjab.
The ratings are dependent on the sustained business and financial risk profile of the AOP. Meanwhile, improvement in governance practices to improve industry dynamics would be beneficial for the ratings.

About the Entity
Sayban International (under Sayban Group) was incorporated in 2005 as an AOP. Sayban started its operations in 2007 and has been working independently since 2015. Previously, the Group was owned by seven partners. Post restructuring, the AOP's shareholding constitutes three partners with Mr. Muhammad Azam Cheema and Mr. Shamsher Hussain holding 44.16% each. While the remaining shareholding vests with Mr. Muhammad Tariq.
Sayban does not have a formal BOD structure being an AOP. All three partners are actively involved in the management. Mr. Muhammad Azam Cheema manages the AOP as its CEO. He possesses vast business acumen spanning over two and half decades. He is supported by a team of experienced professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.