PACRA Upgrades the Entity Ratings of Mumtaz Feeds & Allied Industries (Pvt.) Limited

The rating reflects the expanding business operations of Mumtaz Feeds & Allied Industries (Pvt.) Limited ('Mumtaz Feeds' or 'the Company') in the poultry feed sector, underpinned by prudent financial management and adequate liquidity buffers. The upgrade is primarily driven by the Mumtaz Group's moderate yet integrated scale of operations, which extends across various stages of the value chain, including soya solvent extraction (Mumtaz Agro Industries Pvt. Ltd) and broiler farming (Mumtaz Chick & Mumtaz Protein Farms). The Group is currently in the process of establishing another feed mill to capture the market in central Punjab, a move that will further enhance operational synergies. Additionally, the Company has expanded its production capacity over the rating horizon.
The upgrade also factors in a material reduction in short-term debt, resulting in stronger leverage metrics and an improved equity base through internal capital generation. Company also has a favourable financial risk profile characterised by a sound capital structure. Improved profitability and business performance in FY2024, compared to previous years, have positively impacted the Company’s coverage metrics, collectively supporting its enhanced credit profile and resilience amid sector-specific challenges.
Mumtaz Feeds remains exposed to inherent risks within the feed industry, particularly fluctuating raw material prices and potential disease outbreaks. However, PACRA acknowledges the bio-security measures implemented by the Company over the years, which mitigate these risks to some extent. Extended credit terms from suppliers reinforce the Company's working capital management, while effective debtor management contributes to steady cash flows.
The Company’s financial flexibility is further enhanced by a subordinated loan from its sponsor, providing additional support to its creditworthiness. This loan, coupled with Mumtaz Feeds' demonstrated ability to maintain liquidity underpinned by conservative financial policies reflects the Company's capacity to navigate market pressures while sustaining growth.
The ratings remain dependent on management's ability to capture additional market share, improve margins, and drive profitability. Maintaining strict discipline in working capital management and moderate leveraging is crucial. Any significant deterioration in margins or coverage metrics could negatively impact the ratings.

About the Entity
Mumtaz Feeds & Allied Industries (Pvt.) Limited was incorporated as a Private Limited Company in 2016, with commercial operations commencing in 2017. The Company primarily engages in the production and sale of broiler and layer feed in various formulations. The installed annual production capacity stands at 144,000 MT (40 MT per hour). Major shareholding in Mumtaz Feeds resides with Mr. Aamir Ali Khan (~35%), followed by Mr. Muhammad Umer (~20%). Mr. Nasir Malik and his brother Mr. Yasir Malik each hold a 17.5% stake. Mr. Aamir Ali Khan, the CEO and Chairman of the Board, brings over two decades of industry experience, which continues to play a pivotal role in the Company's operational success.