PACRA Maintains Entity Ratings of Sayban International

The ratings assigned to Sayban International (“Sayban” or “the Business”) reflect the sponsors’ extensive experience in the pesticide industry, a strong brand franchise, an established market position, and a broad geographic footprint within Pakistan. However, the Business requires improvement in financial transparency. The domestic pesticide sector has recently faced significant challenges due to the absence of supportive government policies and the adverse impact of floods, which have collectively weighed on the yields of major crops. Notwithstanding these challenges, Sayban has successfully maintained its market share. Sayban’s revenue profile is diversified across pesticides (~79%), plant growth regulators and micro-nutrients (~10%), seeds (~7%), and fertilizers (~4%). Although the top line declined by ~11%, it remains at a sound level, supported by a robust nationwide sales network, with margins and profitability staying intact. The Business funds its working capital requirements through a combination of internal cash flows and short-term borrowings. Consequently, its financial risk profile has remained stable, underpinned by a moderately leveraged capital structure and strong coverage metrics. Currently, the Business is undergoing a structural transition, as Mr. Shamsher Hussain and Mr. M. Tariq are diluting their equity stakes. Post settlement with the retiring partners, the ownership of the Business rests with Mr. M. Azam Cheema and his family. This change is expected to elevate leverage going forward. The exact terms of the restructuring, as well as its timely and successful execution, are critical considerations. In view of these evolving dynamics, PACRA has placed the maintained entity ratings on Watch.
The ratings are dependent on the sustained business and financial risk profile of the Business. Meanwhile, improvement in governance practices would be beneficial for the ratings.

About the Entity
Sayban International ("Sayban" or "the Business") was incorporated in 2005 as a partnership concern. Previously, the shareholding vested among Mr. M. Azam Cheema, Mr. Shamsher Hussain, and Mr. M. Tariq. However, recently, Mr. Shamsher and Mr. M. Tariq have divested their stake in the Business. Now, the partnership resides between Mr. M. Azam (~98%) and his wife, Mrs. Shabana Mumtaz (~2%). Mr. M. Azam is the key decision-maker for the Business and heads it as the CEO. He is supported by a team of experienced professionals.