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Outlook on Sayban’s Ratings is Positive – Ratings Maintained

Lahore, November 23, 2022 (PPI-OT):The assigned ratings of Sayban International (“Sayban” or “the AOP”) take into account the extensive experience of the sponsors in pesticide industry, strong brands, established industry presence and wide geographical reach in the domestic market. The AOP retains its market share despite fragmentation in the crop protection industry and uncertainties at the economic and agricultural levels. The AOP has maintained a healthy business risk profile backed by its established industry presence, introduction of new products in the domestic market and robust sales network across the country. The AOP is one of the leading players in the Pesticides segment and has laid the milestone of introducing ‘Bio Fertilizers’ in Pakistan.

The AOP has diversified revenue streams with i) Pesticides ii) Plant Growth Regulators, iii) Bio Fertilizers, iv) Seeds and (v) Standard Fertilizers. This helped generate revenue over the years while creating diversity in the revenue stream. The sponsors also have set up other companies to expand their agricultural presence, one of which is a pesticides business – Omega Life Sciences Private Limited. Going forward, the Group plans to acquire Sayban International through a newly formed entity, Sayban Zarai Markaz (Pvt.) Ltd. Sayban meets its working capital requirements through a mix of internal cash flows and short-term borrowings. The financial risk profile remains comfortable owing to the continuously decreasing leveraged capital structure and strong coverage’s.

The assigned “Positive Outlook” captures the expected trajectory of Sayban in the future wherein the top line would grow and financial benefits would accrue. The heavy rainfalls and recent floods have severely impacted the pesticides sector, posing to business risk. Pakistan’s agriculture sector suffered massive losses as Surplus or inadequate rains and floods have devastated major crops. However, the Company was able to mitigate this risk on account of an efficient procurement strategy and augmented business concentration in Punjab.

The ratings are dependent on the sustained business and financial risk profile of the AOP. Meanwhile, improvement in governance practices to improve industry dynamics would be beneficial for the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com