PACRA Upgrades Entity Ratings of Sabirs' Vegetable Oils (Pvt.) Limited

Sabirs’ Vegetable Oils (Pvt.) Ltd. ("the Company”) maintains a pivotal role as the backward integration arm of the Sabirs’ Group, providing a link that secures the supply chain for “Sabroso”, one of Pakistan’s premier frozen food brands. This strategic positioning creates a robust "captive demand" ecosystem, wherein the Company’s core output of soybean meal is consistently absorbed by internal group entities, thereby insulating the business from market-driven demand volatility and significant customer concentration risk. The operating environment remains challenging, as nearly 90% of Pakistan’s edible oil requirements are met through imports, predominantly palm oil, with local production accounting for only around 10%. Consequently, the assigned ratings reflect these deep-rooted operational synergies. The Company’s top line moderated slightly in FY25, declining by around 3% to PKR 19,827 million (FY24: PKR 20,405 million). The Company’s cost structure remains exposed to foreign currency volatility, given its reliance on imported soybean seeds sourced primarily from the United States and Brazil. Consequently, fluctuations in global commodity prices and exchange rates directly impact input costs. This exposure was evident in FY25, as the gross profit margin contracted to 7.6% from 8.4% in the preceding year. Despite the pressure on core margins, the Company demonstrated effective cost and financial management, resulting in an improvement in net profitability. The net profit margin increased to 4.5% in FY25 from 3.3% in FY24. From a financial risk perspective, the Company maintains a conservative, low-leverage capital structure entirely composed of short-term borrowings, which, while requiring diligent liquidity management, provides the balance sheet flexibility necessary to support future capacity enhancements. Despite the marginal compression in top-line, the Company’s credit profile remains bolstered by robust internal cash flow generation and a fortified equity base, —supported by retained earnings—provide considerable financial flexibility and underpin future capacity enhancement initiatives. Although governance formalization remains a work in progress, the Company’s strategic positioning within the Sabirs’ Group’s poultry supply chain, its low-leverage profile, and stable operating performance in FY25 collectively reinforce its strong credit quality and upward rating trajectory.
The assigned ratings also reflect the management's effective oversight of the Company’s liquidity position and debt structure, alongside initiatives to support revenue growth. Given the Company’s reliance on imported raw materials, the rating is particularly sensitive to management’s skill in both procurement strategy and mitigating the risk of exchange rate fluctuations, which directly impact the import cost of these materials. Therefore, prudent management of working capital and maintaining strong coverages remains critical. An improvement in both the Company’s business and financial profiles is considered integral to supporting its credit quality.

About the Entity
Sabirs’ Oil was incorporated in 2017 as a private limited concern. Company is primarily engaged in the process of seed filtering, crushing, oil extraction and refining by mechanical and chemical process. Sabirs' Oil has a crushing capacity of 255,936 MT/year and utilized up to ~39%. Sabirs’ Oils majority ownership resides with Dr. F.M Sabir (22.7%). Mr. F.M Sabir have five sons which collectively hold ~70.65% of the Shareholding. The remaining stake resides with two associated companies Sabirs’ Poultry (Pvt.) Ltd. (3.76%) and Shahzor Feeds (Pvt.) Ltd. (2.89%). The BoD is dominated by the sponsoring family. Dr. F.M Sabir serves as Board’s Chairman and CEO.