Profile
Legal Structure
Al-Khair Rice Mills Private Limited (herein referred to as "Al-Khair" or "the Company") is a private limited Company.
Background
Al-Khair is associated with well-established players in the oil marketing and distribution segments. The Group also has a presence in oil logistics, organic farming, and real estate segments. In 2009, Mr. Javed tapped into the rice trading business. In 2012, the oil distribution channel was formally incorporated as Sitara Petroleum. The Group then formed an OMC; Gas & Oil Petroleum. In 2012, rice trading channel was formally incorporated as Al-Khair Rice Mills. Initially, the Company was established as a partnership concern and was run and managed by the sponsoring family. In 2019, Al-Khair's legal status was changed to a private limited Company. Today, the Company holds a membership of the Rice Export Association of Pakistan (REAP).
Operations
The Company’s core operation includes processing and selling Basmati rice. The Company majorly deals in different variants of Basmati including 1121 Basmati classic and premium, Super Basmati rice, and PK 386 Long grain. The processing plant is located at Okara and spans 25 acres. Initially, the Unit had a processing capacity of 15MT/hr. Later, the installed capacity was enhanced to 25MT/hr. Lately, the Unit's capacity is enhanced to 30MT/hr. Al-Khair has the latest imported machinery in place and the plant is a complete manufacturing composite that is capable of performing all production stages: Pre-cleaning, Drying, Color Sorting, De-stoning, Polishing, and Packing. There are 4 storage silos, having 3,250MT capacity each. The focal attention is the quality and its target market. Al-Khair Rice Mills operates under the brand name "Go Grains," serving both domestic and international markets. The company exports its products to various regions, including the Middle East (notably the UAE and Saudi Arabia), as well as Russia and Europe.
Ownership
Ownership Structure
The Company is wholly owned by the sponsoring family, with
the shareholding structure comprising Mr. Javed Iqbal holding 80% stake and Mr.
Siddique Javed holding the remaining 20%.
Stability
The ownership structure of the Company is notably stable, as it is entirely held by the sponsoring family. This consolidated ownership framework minimizes the potential for conflicts and ensures unified decision-making. With all shares vested within the family, the Company benefits from a cohesive vision and a strong commitment to its long-term growth and sustainability.
Business Acumen
The GO Group is owned and operated by three brothers, each bringing specialized expertise to their respective businesses. Mr. Javed Iqbal oversees Al-Khair Rice as the Chief Executive Officer, a role in which he leverages his extensive 40 years of experience in the agriculture sector, specializing in the oil and rice industries. He holds a master’s degree in business education from Punjab University, providing him with a solid foundation in business management and strategic planning. In addition to his leadership role at Al khair Rice Mills, Mr. Javaid serves as a Director at Go Agro Pvt Limited, where he contributes his expertise to enhance the company’s strategic direction and operational success. His long-standing career is marked by a commitment to industry excellence and innovation, driving growth and efficiency in the agricultural sector.
Mr. Tahir Iqbal manages Sitara Petroleum as the CEO. He is a veteran of the Retail & Oil Transportation sector with rich experience in the field spanning more than 30 years
Mr. Khalid Riaz leads GO Petroleum as the C.E.O of the Company. Mr. Khalid Riaz is a veteran of the retail and oil transportation sector with rich experience in the field spanning more than 35 years. In 1979, at a very young age, he started his career by joining his father’s family business which dealt in petroleum products. In 1981, he started his first retail outlet and went onto opening new retail outlets. In 1998, he started his logistics services, which eventually became a big logistics network providing services to major Oil Marketing Companies (OMCs) in Pakistan. In 2011, Khalid Riaz came up with the idea of starting an OMC, which was taken forward. He partnered with Sheikh Shehzad Mubeen & Bilal A. Ansari and formed GO.
Sitara Heights is managed by Mr. Khalid Riaz and Mr. Tahir Iqbal. Company’s principal line of business is development of residential and commercial properties including gated communities and apartments, commercial markets, multistoried building for offices, shopping centers, restaurants and leisure facilities.
Financial Strength
Al-Khair Rice is an integral part of the GO Group, which encompasses a diverse portfolio of businesses, including Gas and Oil Limited, Sitara Petroleum, and Sitara Heights. The financial strength of the sponsoring family is robust, underpinned by their extensive involvement in key sectors such as oil marketing, logistics, organic farming, and real estate.
The Group's strategic decision to acquire a 40% stake in Aramco has significantly bolstered its financial position and operational capabilities. This acquisition not only enhances the Group's market presence but also reinforces its commitment to sustained growth and diversification across its business verticals.
Governance
Board Structure
The Company's BoD comprises two Executive Directors only. Mr. Javed Iqbal and Mr. Siddique Javed.
Members’ Profile
Mr. Javaid Iqbal is the Chief Executive Officer of Al khair Rice Mills Pvt Limited, a role in which he leverages his extensive 40 years of experience in the agriculture sector, specializing in the oil and rice industries. He holds a master’s degree in business education from Punjab University, providing him with a solid foundation in business management and strategic planning. In addition to his leadership role at Al khair Rice Mills, Mr. Javaid serves as a Director at Go Agro Pvt Limited, where he contributes his expertise to enhance the company’s strategic direction and operational success. His long-standing career is marked by a commitment to industry excellence and innovation, driving growth and efficiency in the agricultural sector.
Board Effectiveness
The Directors are actively involved in the management of the Company to oversee and manage the Company's operations, ensuring direct involvement in strategic and operational decision-making. However, the Board does not currently have any sub-committees in place to provide specialized support or assistance in governance or management functions.
Financial Transparency
Ilyas Saeed & Co. Chartered Accountants have been appointed as the auditors for the Company. The firm satisfies QCR ratings and is classified in the ‘A’ category of SBP panel of auditors. In the year ended 31-Aug-24, the auditors issued an unqualified opinion.
Management
Organizational Structure
The Company operates through Procurement, Finance, Sales & Marketing, HR, and Operations. The Company is supported by a highly experienced team, ensuring effective management and operational excellence. All managerial staff at both the head office and the factory report directly to the Directors, enabling streamlined communication, close oversight, and prompt decision-making across all functions. This structure fosters a cohesive workflow and alignment with the Company’s strategic objectives.
Management Team
Mr. Javed, the Chief Executive Officer and Chairman of the Board, brings over 26 years of extensive experience to the business. Prior to the formal establishment of Al-Khair, he was actively involved in the family’s rice farming and trading business, where he honed his expertise in agricultural practices and supply chain management. His deep industry knowledge and strategic vision have been instrumental in driving the Company’s growth and success.
Effectiveness
The management structure currently lacks effectiveness due to the absence of formal management committees. This gap presents an opportunity for improvement, as the establishment of such committees could provide specialized oversight, streamline decision-making processes, and enhance overall governance. By implementing these committees, the Company could achieve more efficient management and better alignment with strategic goals.
MIS
The Company currently utilizes Oracle ERP software for internal processes and information dissemination, ensuring efficient management of operations. However, in line with its growth and evolving needs, the Company plans to transition to SAP ERP software in the near future. This shift is aimed at enhancing system capabilities, improving integration across departments, and supporting the Company’s long-term strategic goals through more advanced and scalable solutions.
Control Environment
The internal audit function is currently managed at the Group level. Moving forward, the Group intends to strengthen its control environment by expanding the internal audit team, with a particular focus on Al-Khair. This initiative aims to improve oversight, ensure greater transparency, and enhance the effectiveness of risk management and compliance processes within the Company.
Business Risk
Industry Dynamics
According to USDA, the 2024/25 production estimate is revised down to 9.5 million tons. An extended period of extremely high temperatures just prior to harvest negatively impacted productivity. Though the 9.5-million-ton crop is slightly less than last year, it would still be the second largest production on record. While the extraordinary performance of the previous marketing year will be difficult to sustain, Pakistan’s rice remains competitive in global markets. As a result of expectations of continued demand from certain key markets, 2024/25 rice exports are projected at 5.8 million tons. To sustain the export momentum, exporters are also targeting non-traditional markets in Africa, Central and South America, and the Far East. A continuous challenge is the detention of Pakistani rice shipments at EU ports due to samples exceeding maximum residue levels (MRL) for mycotoxins and pesticides. Exporters and authorities are actively working to reduce the spike in MRL violations that have been detected at export destinations in recent months.
Relative Position
Al Khair's primary revenue stream is generated from the sale of Basmati rice, a product that underpins its stable market position. Additionally, the company's strength is reinforced by support from its group, which contributes to its operational stability and overall performance.
Revenues
The Company’s revenue stream derives from local and export
sales. The Company achieved significant growth in domestic sales during FY24,
reaching PKR 4.3 billion compared to PKR 3.6 billion in FY23. While domestic
sales continued to drive the majority of revenue (98% of total sales). Export
sales, representing 2% of total sales, declined to PKR 85 million. This decline
is associated with the limited working capital and lifting of import
restrictions from India, which have introduced increased competition in export
markets.
Margins
The company achieved a 12% growth rate while maintaining
stable margins, highlighting its strong financial management. The gross profit
margin increased slightly to 11.7% in FY24, up from 10% in FY23. This
improvement was primarily attributed to increased sales and reduced fixed
overhead costs, driven by lower electricity expenses resulting from the
installation of a 1MW solar power system.
In line with this positive trend, the operating profit
margin improved to 10.9% in FY24 from 9% in FY23, attributed to the effective
management and optimization of operating expenses. Furthermore, the Company's
net profit margin remained stable at 1.7% (FY23: 2.0%), underscoring its
consistent profitability amidst changing market dynamics. These results
demonstrate the Company's ability to sustain financial health through strategic
focus and operational efficiency.
Sustainability
The Company has made a significant stride by increasing its production capacity to 30MT/hr. This expansion not only positions the Company for growth within its existing market but also lays the groundwork for a strategic foray into the export market. The support from sponsors will be instrumental in empowering the Company to achieve its goals and operate at a professional level.
Financial Risk
Working capital
Working
capital represents the net resources available to a company for managing
short-term obligations and supporting operational requirements. Current assets,
including inventory days, play a critical role in determining working capital
needs. During FY24, inventory days improved significantly to 29 days (FY23: 51
days) driven by the timely collection of receivables (FY24: 45 days, FY23: 52
days).
Trade
payable days improved to 2 days in FY24 (FY23: 6 days), reflecting the
company's commitment to timely payments to its vendors. This improvement,
combined with enhanced receivables and inventory management, contributed to an
improvement in net working capital days, which stood at 72 days in FY24
compared to 97 days in FY23. The overall improvement underscores the company's
focus on optimizing its working capital cycle and strengthening its liquidity
position.
Coverages
The Debt Coverage Ratio analysis provides valuable insight
into the company’s capacity to meet its debt obligations through its Free Cash
Flow to Operations (FCFO), reflecting its financial stability and
creditworthiness. The company’s FCFO increased to PKR 577 million in FY24
(FY23: PKR 505 million), demonstrating strong cash generation. However, the
finance cost also rose to PKR 369 million in FY24 (FY23: PKR 244 million),
leading to a slight decrease in the Debt Coverage Ratio, which stood at 1.6x in
FY24 compared to 2.1x in FY23. This indicates a modest reduction in the
company’s ability to cover its debt servicing costs, primarily due to the
higher finance expenses. The significant decrease in the debt payback ratio
from 1.3x in FY23 to 0.2x in FY24 indicates a substantial improvement in the
company's financial health and its ability to manage its debt obligations. The
company maintains a generally strong financial position with robust cash
generation. While rising finance costs have slightly impacted its debt coverage
ability, the significant improvement in the debt payback ratio indicates a
positive trend in its debt management.
Capitalization
The Capitalization Ratio analysis evaluates the
proportion of a company’s capital structure financed through debt, offering
insights into its long-term financial leverage and risk profile. The total debt
of the company decreased significantly to PKR 486 million in FY24, compared to
PKR 1.4 billion in FY23. Notably, 98% of the company's borrowings are
short-term, amounting to PKR 480 million in FY24, down from PKR 1.0 billion in
FY23. This substantial reduction in debt has resulted in a more moderately
leveraged capital structure, with the ratio standing at 26% in FY24, compared
to 57% in FY23. This shift reflects the company’s strategic focus on
deleveraging and optimizing its capital structure, which enhances financial
stability and reduces dependence on external financing. While the predominance
of short-term borrowings provides flexibility, it also requires careful cash
flow management to mitigate liquidity risks. Overall, the improved leverage
positions the company for sustained growth and resilience in the face of market
uncertainties.
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