Sabirs’ Vegetable Oils (Pvt.) Ltd. (Sabirs' Oil’ or ‘the Company’) was incorporated in Oct-17 as a Private Limited Company under Company Act, 2017.

Dr. F. M. Sabir setup Sabir Group in 2005 after getting separated from Hi-Tech Group. He received Shahzor Feeds (Pvt.) Ltd, with a production capacity of 324,000MT/annum, as his share on separation. Sabir Poultry (Pvt.) Ltd was incorporated as an integrated supply chain company. The Group set up two AoP concerns, Sabirs’ Feeds and Multan Feeds, currently with a production capacity of 288,000MT/annum and 400,000MT/annum, respectively. In 2015, the Group entered in the processed and packaged food market by the brand name of Sabroso. The Group's latest venture, Sabirs’ vegetable Oil with a crushing capacity of 700 MT/day was set up in 2017, as a backward integration plan.

Sabirs’ Oil is primarily engaged in seed filtering, crushing, oil extraction and refining by mechanical and chemical processes from soybean seed. During FY24, the Company utilization levels posted a dip and stood at 42% (FY23: 45%) at stood at 108,697 M.T/annum. During the year the Company also enhanced its installed capacity from 127,968 M.T to 255,936 M.T.

Major 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 Company is completely owned by the sponsoring family. Sabirs’ Oils succession plan is not formally documented; however, the succession is planned to be effectively transmitted among his sons.

Dr. Sabir has been associated with the poultry supply chain for more than 40 years. He is a DVM and is experienced in the relating fields including feed production, poultry production, breeding, hatching, broiler production and processing plants.

Sabirs’ Group of Companies comprises entities operating across the whole poultry supply chain. The Group’s poultry farms and feed mill remains its main revenue generating ventures. The Group has third largest capacity for DOC standing at ~1,000,000 chicks per day and contributing towards Group financial strength.

Sabirs’ Oil's BoD comprises six Executive Directors, from the sponsoring family. Lack of independent oversight and diversity indicates a room for improvement in the governance structure.

The BoD is a key source of oversight and guidance for the management of all Group Companies. The Board’s Chairman, Mr. Faqir Mohammad Sabir is associated with the Sabirs’ Group since inception. He has an experience of more than 40 years in poultry and allied chain. Mr. Mohammad Zeeshan Sabir, the eldest son of Mr. Faqir, Executive Director, is associated with the Company’s Board since 2017 and has an overall experience of more than 20 years. Mr. Imran Sabir, Executive Director, is associated with the Company’s Board from since has an overall experience of 20 years as well. The Board members are well equipped with the relevant business knowledge.

Board’s effectiveness indicates room for improvement as it lacks committees and formal structure.

The external auditors of the Company, BDO Ebrahim and Co. Chartered Accountants, have expressed an unqualified opinion on the financial statements for the year ended Jun-24. The firm is placed in 'category A of SBP' panel of auditors.

The organizational structure has been centralized with less efficient delegation of responsibilities. The Company operates through five functions: Production, Sales, Accounts, Audit and HR. All functional managers’ report to the respective Departmental Heads who then reports to the CEO. The CEO then makes all the pertinent decisions.

Dr. Sabir, Group CEO, is a DVM with an exposure in veterinary medicine, breeding, feed production and broiler production. He is assisted by a team of professionals. Mr. Ijaz Haider, Chief Accountant, has been associated with the Group for a decade.

Management’s effectiveness and efficiency is ensured through timely information provided at the Group level. However, there are no committees and management minutes are not prepared indicating a room for improvement.

The Company has ERP-Oracle that generates reports daily. The whole data base regarding customers, ageing, sales and production is integrated into the MIS system.

The Company has established an internal audit function at both the entity and group levels, incorporating an effective resource-sharing mechanism to enhance operational efficiency and oversight across all tiers of the organization.

Edible oil is one of the highest imported commodities in Pakistan. During the year, 2.717 million tonnes of edible oil (including oil extracted from imported oilseed) of value Rs 794 billion was im-ported. Local edible oil production remains at 0.471 million tonnes. In line with population growth, edible oil demand is forecast to grow about 5% and palm oil imports grew accordingly, reaching 3.6mln tons in FY24. The price of Soybean oilseed stood at 479 USD/MT in Jun-24 as compared to 591 USD/MT in the comparative year, showcasing a decrease of ~18%. On the other side, the price of Palm Oil stood at 873 USD/MT in Jun-24 and 816 USD/MT in Jun-23, forecasted to ease further. Comparatively reductions in selling prices have impacted the revenues substantially for the refineries. Due to the rise in input costs, especially raw material cost, many companies have experienced a reduction in their profit margins and faced working capital shortages. With expectations for better cottonseed pro-duction, total oilseed production in FY24 is projected to increase to 2.95 million tons, 24% above that of FY23. The future outlook of the industry is developing due to price volatility and PKR depreciation.

Sabirs' Oil holds a notable position in the market in terms of revenue. The Company is well-positioned for growth as it partially caters to the soybean meal demand of its associates, benefiting from an upward trajectory.

Sabirs' Vegetable Oils (Pvt.) Limited exhibited a robust topline expansion in FY24, with revenues escalating by a significant 88% year-on-year to PKR 20.4 billion, compared to PKR 10.8 billion in FY23. The revenue mix remains concentrated, with soybean/canola meal emerging as the dominant segment, contributing 48% to the topline and registering an impressive 47% growth to PKR 11 billion. Rapeseed meal accounted for 27% of total revenues, highlighting its critical role in diversifying the portfolio, while soybean/canola oil contributed 22%, reflecting a stable performance with 3% growth year-on-year. The "Others" segment, though constituting just 2% of revenues, exhibited exponential growth, doubling to PKR 533 million from PKR 272 million in FY23. This remarkable revenue growth underscores the company’s operational resilience and ability to capitalize on market dynamics. However, the dependency on a concentrated product mix introduces revenue volatility risk, warranting strategic diversification to mitigate susceptibility to demand fluctuations and price volatility in core segments.

The Company is exposed to foreign currency risk as soybean seeds are imported from Africa and United States of America. The import price has volatility depending on the demand and supply mechanism. Sabirs' Vegetable Oils (Pvt.) Limited witnessed a slight contraction in its profitability margins during FY24, with gross profit and operating profit margins narrowing to 8% from 9% in FY23. This decline likely reflects increased raw material costs or pricing pressures amidst heightened market competition. The net profit margin remained static at 3%, indicating limited absorption of cost pressures at the bottom line. A noteworthy improvement was observed in finance costs, which declined to 4% of sales compared to 6% in FY23, possibly due to favorable interest rates or efficient debt restructuring. While the EBITDA efficiency ratio strengthened to 25% (FY23: 17%), supporting operational performance, the persistent pressure on margins highlights the need for cost rationalization and more effective procurement strategies to safeguard profitability against volatile input costs and pricing constraints.

The Sabirs’ Oil plans to fulfill the in-house demand of poultry feed. The demand still exceeds the current capacity of the Company. The Company operates as part of the supply chain integration strategy so the risk of customer base is mitigated to a great extent.

Sabirs' Vegetable Oils (Pvt.) Limited demonstrated significant improvement in working capital efficiency during FY24, with gross working capital days reducing to 47.74 days from 114.82 days in FY23. This reduction is primarily driven by a substantial decrease in inventory holding days, which fell to 42.67 days from 107.14 days in FY23. The improvement is notable across all inventory categories, with raw material days dropping sharply to 35.43 days (FY23: 91.70 days) and finished goods days halving to 7.00 days (FY23: 15.00 days), reflecting improved inventory management and demand forecasting. Trade receivables also improved, declining to 5.07 days from 7.67 days, indicative of efficient credit controls and timely collections. Trade payables increased to 13.82 days from 1.06 days in FY23, likely reflecting enhanced supplier credit terms, which helped optimize cash flow. Consequently, net working capital days decreased significantly to 33.92 days from 113.76 days in FY23, improving the liquidity position. However, leverage ratios increased, with short-term trade leverage and total leverage rising to 43% and 39%, respectively, from 19% in FY23, signaling higher reliance on short-term financing. The current ratio declined markedly to 1.64x (FY23: 22.20x), yet remains adequate, suggesting a more balanced liquidity profile. While these metrics highlight improved operational efficiency, the higher leverage warrants close monitoring to mitigate refinancing and liquidity risks.

Sabirs' Vegetable Oils (Pvt.) Limited displayed improvements in its coverage metrics during FY24, reflecting better financial risk management. The EBITDA-to-Finance Cost ratio increased to 2.34x from 1.60x in FY23, indicating improved earnings generation relative to interest obligations. Similarly, FCFO (Funds from Cash Flow from Operations) coverage of finance costs strengthened, with FCFO/Finance Cost rising to 2.14x from 1.60x in FY23, showcasing enhanced internal cash generation capacity to service debt-related costs.

Sabirs' Vegetable Oils (Pvt.) Limited’s capitalization profile in FY24 demonstrates a marked improvement in financial prudence, with the Total Borrowings-to-(Total Borrowings + Shareholders' Equity) ratio reducing to 0% from 55% in FY23. This complete elimination of borrowings underscores the company’s shift towards a fully equity-financed structure, significantly mitigating leverage-related risks. Consequently, short-term borrowings, which constituted 100% of total borrowings in FY23, were entirely extinguished, as reflected by a nil utilization in FY24. The interest or markup payable, which previously accounted for 34 days in FY23, has also been fully cleared, indicating enhanced liquidity and operational efficiency. However, the spread over KIBOR increased to 5.6% in FY24 from 1.6% in FY23, potentially reflecting tighter lending conditions or adjusted borrowing terms before the company transitioned to a debt-free position.