Lahore, November 29, 2021 (PPI-OT):Sayban International (“Sayban” or “the AOP”) operates in four segments: i) Pesticides ii) Micro-Fertilizer, iii) Seeds and iv) Fertilizer and is one of the leading players in the first segment. It has laid the milestone of introducing ‘bio fertilizers’ in Pakistan. The AOP has sizeable turnover trendline over the years with noticeable growth of 30.1% for Jun-21 (CY20: 26.9%) since, the economic activities got revived after Covid-19 adverse implications. Reported revenues has contribution from each segment, while the prime contributor remains pesticide segment. Business profitability is optimistic while growing at consistent rate (6MCY21: PKR 213mln; CY20: PKR 416mln). Sayban has managed to mark its presence in the market through operational efficacy.
The AOP retains its market share despite fragmentation in the crop protection industry and uncertainties at the economic and agricultural level. Therefore, demand for pesticides on overall basis remain steady. Historically, Sayban was a part of the Auriga Group, through restructuring and separation of business partners. Now, the AOP operates in the ambit of Sayban Group. The group has also set up other companies to expand its agricultural presence, one of which is a pesticides business – Comega Life Sciences (Pvt.) Ltd. 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 cashflows and short-term borrowings.
The financial risk profile remains comfortable owing to continuously decreasing leveraged capital structure (6MFY21: 26.7%; CY20: 35.3%) and strong coverages thereon. The assigned Positive Outlook captures the expected trajectory of Sayban in future wherein the top-line would grow and financial benefits would accrue. The ratings are dependent on sustained business and financial risk profile of the AOP. Meanwhile, improvement in governance practices to improve industry dynamics would be beneficial for the ratings.
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Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
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Lahore, Pakistan
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