PACRA Maintains Entity Ratings of Meskay & Femtee Trading Company (Pvt.) Limited

The ratings reflect Meskay & Femtee Trading Company (Pvt.) Ltd.'s ('Meskay' or 'the Company') established and prominent position in the rice exporters market of the country. The Company enjoys a strong relative position underpinned by a sizeable processing capacity and a highly diversified export market. The Company operates a vertically integrated, export-oriented production capability, where paddy is procured and processed till finished goods, with exports contributing approximately 97% of FY25 revenue. The Company benefits from the leadership of owners possessing extensive international experience and a demonstrated track record of successful business ventures in grain trading. Meskay maintains a strong governance framework, underpinned by an experienced management team and established customer relationships. Sponsors' acumen is reflected in the strategic development of the corporate culture and recent expansion initiatives, notably including the acquisition of a ~69% stake in Mandviwala Mauser Plastic Industries Limited, a PSX-listed plastic manufacturer.
In contrast to the historical trajectory, the Company’s financial performance faced significant constraints during FY25, primarily characterized by a contraction in business volumes. Following a substantial revenue surge in the preceding period, the Company’s topline contracted by ~42% YoY in FY25. Revenue primarily originated from Rice, which remained the dominant contributor at ~86% (FY24: ~83%), within which the IRRI-6 variety accounted for ~87% of total rice sales. Despite the reduction in topline, the Company's gross profit margin witnessed an improvement, driven by favorable procurement efficiencies. However, operating profit margins were adversely impacted by higher operating expenses, while net profit margins compressed to ~0.3% (FY24: ~1.1%), largely attributable to elevated finance costs. The Company’s previously stable financial risk profile has faced headwinds, with expanding working capital requirements driven by higher inventory holding and elongated receivable cycles, resulting in a sharp decline in FCFOs and a thinning of the finance coverage indicator to ~1.3x (FY24: ~3.3x). This strained financial position, coupled with a capital structure heavily skewed toward short-term borrowings, exposes the Company to refinancing and liquidity risks alongside inherent vulnerabilities to commodity price volatility, exchange rate fluctuations, and rice segment concentration. These internal pressures are further compounded by a challenging industry backdrop within Pakistan's vital rice export sector; the exceptional growth fueled in the previous fiscal year is facing intensified global competition. Consequently, this evolving landscape remains heavily constrained by elevated freight costs, geopolitical disruptions, and weakening external demand.
The ratings are dependent upon the sustenance of business volumes under the current challenging environment. As the global economy undergoes distress, business sustainability emerges as the key challenge for exporters. Meanwhile, managing a stable financial risk profile, with an increased and rigorous emphasis on working capital management, remains imperative for the ratings.

About the Entity
Meskey & Femtee Trading Company (Pvt.) Limited (‘Meskey’ or ‘the Company’) was incorporated in 2006 as a Private Limited Company. The Company is primarily engaged in processing/manufacturing and export of grains (rice, corn, guar, and wheat) and all types of agricultural products, trading in agriculture machinery, and accessories, and providing agriculture farming services. Currently, the Company has a rice processing capacity of 134 MT per hour. Meskey & Femtee mainly exports rice to Africa, America (North and South), Asia, and Europe. Major ownership of the Company resides with Mr. Shahid Tawawalla (~ 72%); followed by an equal holding between his father, Mr. Wahid F Tawawalla (~14%), and his wife, Mrs. Huma Darugar (~14%). Mr. Shahid heads the Company as the CEO and is supported by a team of experienced individuals.