PACRA Assigns Initial Ratings to Zarea Limited - PPSTS - PKR 1bln - Jan-26

Zarea Limited ('ZAL' or the 'Company') is a tech-enabled B2B e-commerce platform that digitizes Pakistan’s industrial and agricultural supply chains. By disintermediating traditional channels, the Company has executed over 17,000 orders across more than 50 cities and secured long-term offtake agreements with blue-chip corporates. Its agile microservices architecture, real-time tracking capabilities, and proprietary 10-year commodity data repository contribute to strong customer stickiness. ZAL is also Pakistan’s first structured entrant in the agri-biomass segment, positioning it to capture a rapidly formalizing market. Governance is anchored by a seven-member board and supported by professionals with deep experience in government, banking, and industry. Institutionalized oversight across finance, technology, supply chain, and marketing enhances the Company’s execution capacity. Financially, Zarea Limited demonstrated strong momentum in 1QFY26, with revenue surging to PKR 783.6 million, representing a 308% year-on-year increase. Profit after taxation rose sharply to PKR 558.2 million (EPS: PKR 2.13), marking a 418% YoY growth. The Company’s equity strengthened to approximately PKR 2.83 billion, supported by accumulated reserves of PKR 1.66 billion. Its 10-year STZA tax exemption further bolsters cash flow and interest coverage. ZAL has fully met its working capital requirements through internal cash generation. To support scale-up and diversification, the Company has issued a privately placed, rated, unsecured short-term Sukuk under a Musharakah (Shirkat-ul-Aqd) structure. ZAL has expressly undertaken not to incur additional debt during the Sukuk’s tenor. The instrument benefits from adequate structural protections. Under the Musharakah structure, investors and the obligor jointly participate in the commercial venture, creating greater alignment of risk and return. Proceeds are contractually earmarked for working capital deployment in agri-biomass and commodities procurement, specifically corn cob, corn grain, paddy/rice husk, and wheat/wheat straw. Importantly, feedstock procurement is aligned with prevailing industry demand and supported by historical offtake patterns with established corporates. This demand-driven approach enables multiple procurement-sale cycles within the instrument’s tenure, enhancing visibility over cash flow generation. Additionally, the rating incorporates the presence of a dedicated Sukuk Payment Account, which requires principal pre-deposits in equal weekly tranches ahead of maturity. The proportion of the instrument relative to the Company’s total deployment in self-liquidating working capital assets remains low, further mitigating repayment risk.
Compliance with the structure of the instrument including filling the SPA in a timely manner is integral to the rating.

About the Entity
Zarea Limited, originally Vision 2A (Pvt.) Limited, was established on September 16, 2020, rebranded in August 2022, and became a public limited company on April 15, 2024. Headquartered at the National Aerospace Science and Technology Park (NASTP) in Lahore Cantt, ZAL operates with a forward-looking governance framework. Founder and CEO Mr. Ali Alam Qamar holds a ~41.5% stake, with M/S Goldfinger Private Limited, also owned by him, holding ~34.3%.

About the Instrument
The issued Sukuk is a Shariah-compliant, privately placed, unsecured short-term facility under Musharakah (Shirkat-ul-Aqd), with an issue size of PKR 1,000 million and a six-month tenor from January to July 2026 at 6MKIBOR + 2.50%. Profit and principal are settled in a single payment at maturity. Structural protections are provided through a Sukuk Payment Account, with staged pre-funding in four weekly tranches, the first three covering principal and the final covering both principal and profit.