Jhulay Lal Parboiled Rice Mills (Jhulay Lal or 'the business') is a partnership firm established in 2011.

Mr. Gurmukh Das, one of the two sponsors of Jhulay Lal, served as the AVP of Faysal bank. He resigned from the job and entered into a partnership business with his brother, Mr. Ramesh Kumar, later in 2010. The business was formerly operated by their father Mr. Megho Mal.

Jhulay Lal operates as a key player in the rice processing and sales sector. The company’s infrastructure comprises two strategically located facilities equipped for husking, polishing, and processing rice paddy. The first facility, situated in Golarchi, Badin, focuses exclusively on paddy processing, while the second facility at Port Qasim, Karachi, is designed to handle both paddy and processed rice, enhancing operational flexibility. With a rated processing capacity of 60 metric tons per hour, the company achieved a utilization rate of ~57% during FY24. This level of utilization reflects Jhulay Lal's ability to effectively manage its resources while responding to market demand, ensuring operational efficiency and business continuity.

Mr. Gurmukh Das and Mr. Ramesh Kumar are the two owners of Jhulay Lal having an equal stake in the business.

There is no change in the ownership structure of Jhulay Lal since its inception. The ownership structure is expected to remain stable for a foreseeable period.

Both Mr. Gurmukh Das and Mr. Ramesh Kumar are experienced professionals of the industry. Mr. Gurmukh has developed a strong understanding of the export market as they have a presence in ~11 countries whereas Mr. Ramesh Kumar is responsible for looking into the matters pertaining to Jhulay Lal's plant site and the management.

Owners of Jhulay Lal also own CNG stations, agricultural land and property in different cities. The other investment ventures are producing good cash flow streams for the sponsors. Owner’s ability and willingness to support the business in the time of need is considered adequate.

As a partnership firm, Jhulay Lal does not have a formal governance structure. The absence of formal governance framework poses a significant risk to sustainability and reflects a lack of independent oversight.

The owners of the business are experienced professionals and have been involved in the same business for decades.

Jhulay Lal does not have any board committees. The establishment of the Board committees is essential for the improvement of the overall governance structure.

Jhulay Lal's external auditors are A.G. HABIB & CO. Neither does the Audit firm satisfy the QCR ratings nor it has a listing in the State Bank of Pakistan’s Panel of Auditors. The auditors issued an unqualified opinion on Jhulay Lal’s financial statements for FY23.

Jhulay Lal has a lean and limited organizational structure. Sponsors of the business are actively involved in the management of the business. Mr. Megho Mal is also actively engaged in the business separately at the plant, he does not hold any formal position in the organogram though.

Both directors are assisted by Mr. Fakhrudin Majal and Mr. Shakeel Ahmed who are designated as Head of Accounts and Head of Exports respectively.

Currently, Jhulay Lal does not have any formal management committees. All pertinent issues are resolved by the partners themselves.

Jhulay Lal uses internally generated software as its main software for the preparation of financial accounts.

The business does not has an internal audit function.

Industry insights indicate a landmark achievement for Pakistani rice exporters, who amassed an unprecedented $3.93 billion in foreign exchange during FY24, exporting approximately 6 million tons of rice. This exceptional performance was propelled by India’s temporary export ban following a shortfall in its rice crop, creating a strategic opportunity for Pakistan to strengthen its competitive foothold in the global market. With India as a principal competitor, Pakistan adeptly leveraged this opening to expand its market presence and maximize export revenues.

The business has a strong presence in the country's rice market. The business is committed to improving its foothold in foreign countries.

Jhulay Lal’s sales composition remains heavily concentrated in IRRI-6 non-basmati rice, which constitutes approximately 80% of its portfolio, with basmati rice making up the remaining 20%. In FY24, the company reported a substantial revenue increase, reaching PKR 35,023 million a fivefold rise from FY23’s PKR 5,804 million. Export sales contributing 54.9% (PKR 19.23 billion) and local sales accounting for 45.1% (PKR 15.80 billion). Export revenue was geographically diversified, with 65.3% of exports directed to Africa and 34.7% to Asia, reflecting a strong presence across key international markets. This remarkable revenue growth is primarily driven by a surge in volumetric sales, as Jhulay Lal capitalized on market openings following India’s export ban. The company's ability to expand into new markets and respond to heightened demand has strengthened its revenue base. However, the sustainability of this growth remains contingent on the continued availability of favorable market conditions and the company’s capacity to maintain competitive positioning. This impressive yet concentrated growth trajectory warrants careful observation, particularly as any shifts in market dynamics or competitive pressures could impact future revenue stability and, consequently, the company’s credit profile.

Jhulay Lal’s recent financial performance indicates a notable decline in profitability, warranting close monitoring. The gross profit margin contracted to 5.7%, down from 12.0%, primarily due to heightened cost pressures. This reduction in gross margin signals a diminished buffer against cost volatility. Furthermore, the operating profit margin fell to 5.2% from 9.7%, reflecting operational challenges that could impact future cash flows. The PBIT margin also decreased to 5.3% from 10.5%, suggesting a constrained capacity to absorb additional costs before interest obligations. The decline in net profit margin to 2.6% from 3.1% further underscores the strain on overall profitability, potentially impacting liquidity and debt-servicing capacity.

Jhulay Lal’s strategic initiatives reflect a proactive approach to diversifying and strengthening its revenue streams. The company is committed to expanding its distribution network across the African market, where it currently has a presence in 11 countries, signaling its ambition to deepen market penetration. Additionally, the establishment of a dedicated distribution entity, Monarda, in Hong Kong enhances its logistical capabilities and positions it well to tap into Asian demand. Moreover, Jhulay Lal’s focus on exporting value-added by-products aligns with its goal to drive revenue growth through product diversification. Its exploration of maize trading opportunities in Asian markets further indicates a willingness to broaden its agricultural portfolio. These steps underscore the company’s commitment to revenue diversification, which could support financial stability and enhance its credit profile. However, successful execution will depend on Jhulay Lal’s ability to manage operational risks and navigate competitive pressures in these new ventures.

Jhulay Lal’s working capital requirements arise primarily from the need to finance inventories and trade receivables, for which the company depends on a mix of internal cash flows and short-term borrowings, notably the Export Refinancing Facility (ERF). In FY24, Jhulay Lal achieved a substantial reduction in net working capital days to approximately 54 days, down from 269 days in the prior period. This improvement is largely attributed to a significantly shortened inventory holding period, which decreased to 31 days from 123 days, and a streamlined receivables cycle, reduced to 24 days from 148 days. Despite these positive trends in working capital efficiency, the lack of trade payables leverage (remaining at 0 days, previously 2 days) may limit the company's flexibility in managing cash flows through supplier financing. Nevertheless, the current working capital structure suggests ample capacity for short-term borrowing if needed, with a leaner balance between cash inflows and outflows. However, maintaining this level of efficiency will be crucial to preserving creditworthiness and managing any potential strains on cash flow amid market volatility.

During FY24, Jhulay Lal's financial coverage ratios indicate some strain in its ability to meet financial obligations. The EBITDA-to-finance cost ratio has declined to 1.4x from 2.7x, reflecting a decrease in the company’s operating profitability relative to its interest expenses. Similarly, the FCFO-to-finance cost ratio has dropped to 1.4x from 2.6x, signaling weakened cash flow coverage for finance costs. This reduction in coverage ratios highlights increased financial risk, particularly in an competitive environment . The company's FCFO growth for the period stands at 16.1%, up from 11.8%. However, despite this growth in operating cash flow, the core coverage ratios have not kept pace due to rising finance costs. These declining coverage ratios suggest potential vulnerabilities in Jhulay Lal's financial structure, underscoring the importance of improved cash flow management and reducing finance costs to stabilize its credit profile.

Company’s capital structure remains highly leveraged, with leverage at 49.2% in FY24, a slight increase from 48% in FY23. The company’s borrowings are entirely short-term, comprising approximately 100% of total debt, consistent with the prior year. However, it is worth noting that the company has benefited from the State Bank of Pakistan’s concessionary rates, which have mitigated borrowing costs and provided some relief on interest expenses. Sustained reliance on short-term debt could impact the company’s financial flexibility and elevate liquidity risk if concessional financing options are reduced or withdrawn.