Jasons Commodities (‘the Business’) was incorporated in Dec-2012 as a Sole

Having previously established a successful presence in the confectionery industry, Mr. Amin Jessani and his son, Danish Jessani, diversified their business interests by entering the rice sector. This strategic move saw them establish a state-of-the-art rice mill with a processing capacity of 20 metric tons per hour, laying the groundwork for the inception of Jasons Commodities.

Jasons Commodities specializes in the processing of semi-processed non-basmati rice for export, with a primary focus on the Chinese and African markets. The Business has experienced varying levels of success in recent years.

The ownership of the Business is solely vested in Mr. Danish Jessani, who serves as the sole proprietor. As the exclusive owner, Mr. Jessani holds full control over all aspects of the Business, including its operations, financial management, and strategic decision-making. In this capacity, he is responsible for all profits, losses, and liabilities associated with the Business. The structure of sole proprietorship means that Mr. Jessani is the single individual in charge, with no partners or shareholders, which allows for direct, centralized decision-making but also places all risks and rewards squarely on his shoulders.

The Business is fully owned by its CEO, Mr. Danish Jessani, who holds complete ownership and control. This ownership structure ensures a high degree of stability within the organization, as all strategic decisions and operational directions are centralized under Mr. Jessani’s leadership. The singular ownership allows for streamlined decision-making processes and clear accountability, contributing to the overall stability and continuity of the Business. As the sole decision-maker, Mr. Jessani is able to maintain a consistent vision for the Business, promoting long-term growth and sustainability.

Mr. Danish Jessani and his family possess a rich heritage in the confectionery and export industries, with a collective experience spanning over three decades. This deep-rooted industry expertise has recently been extended to the rice sector, leveraging their established Business acumen and international market connections.

The sponsor demonstrates a robust financial position with sufficient net worth to provide adequate financial support to the Business during periods of financial strain or unforeseen challenges.

As a sole proprietorship, the Business operates without a formal corporate governance structure. This means that there are no boards of directors, committees, or other governance bodies typically found in larger corporate entities.

The ownership of the Business is solely vested in Mr. Danish Jessani, who serves as the sole proprietor. As the exclusive owner, Mr. Jessani holds full control over all aspects of the Business, including its operations, financial management, and strategic decision-making. In this capacity, he is responsible for all profits, losses, and liabilities associated with the Business.

The Business currently lacks a formalized Board structure, which is essential for providing strategic oversight and governance. A formal Board is critical for ensuring accountability, guiding decision-making, and ensuring compliance with relevant regulations.

The external auditors of the Company, Hussain Lakhani & Co. Chartered Accountants, have expressed an unqualified opinion on the financial statements of Jasons Commodities for the year ended June-24. The firm is neither QCR rated nor in SBP’s panel of auditors.

The Business operates with a linear organizational structure, primarily centered around two key functions: Production and Finance. This structure emphasizes a direct chain of command with clear lines of authority and decision-making. The Production function focuses on the core operational processes to ensure efficient manufacturing and service delivery, while the Finance function manages the organization’s financial planning, reporting, and resource allocation. While this streamlined structure can enhance efficiency and clarity in small-scale or specialized operations, it may limit cross-functional collaboration and adaptability as the organization grows or diversifies.

Mr. Danish Jessani, the Chief Executive Officer (CEO) of the Business, has been a pivotal part of the organization since its inception. With over 21 years of extensive experience in the rice and confectionery sectors, he brings deep industry knowledge and strategic leadership to the Business. His expertise has been instrumental in driving the growth and success of the Business.

The Business currently does not have formal management committees in place. Instead, the management team convenes on an as-needed basis to address operational needs and ensure the continued efficiency of Business activities. While this approach provides flexibility and responsiveness, the absence of structured committees may limit opportunities for more strategic, collaborative decision-making and oversight. Establishing formal management committees could enhance governance, streamline decision-making processes, and promote long-term organizational effectiveness.

The Business utilizes Excel-based reporting systems, with reports being generated on an as-needed basis to support management decision-making. This approach provides flexibility in addressing specific informational requirements but may lack the efficiency and scalability of automated or integrated reporting solutions

The Business currently lacks an internal audit function. The absence of this critical function may limit the organization’s ability to independently assess and ensure the effectiveness of its internal controls, risk management processes, and overall operational efficiency.

The rice sector, a significant contributor to Pakistan's agricultural economy, representing approximately 3.5% of agricultural value addition and 0.7% of the nation's Gross Domestic Product (GDP), experienced a substantial surge in production during the fiscal year 2024 (FY24). This surge, coupled with heightened global demand and a temporary export ban imposed by India, propelled a remarkable 35% increase in rice production. Consequently, basmati rice exports experienced a significant boost, soaring from $650 million to $876 million in FY24.

The Business is an emerging and growing competitor in the country's rice export market, steadily establishing its presence and enhancing its market share within the industry.

The Business primarily generates its revenue through the export of non-basmati (IRRI 6) rice to China and African countries. Export sales constitute the core of its revenue stream. During FY24, the Business achieved total sales of PKR 18 billion, reflecting a significant 49% growth compared to PKR 12 billion in FY23. This growth is attributed to a combination of increased sales volume and the impact of rupee devaluation.

The Business has successfully sustained its profitability margins, demonstrating effective operational and financial management. During FY24, the gross profit margin was recorded at 6%, primarily driven by a significant increase in sales volumes, highlighting the Business’s ability to capitalize on market opportunities. The operating profit margin stood at 5.6% (FY23: 5.9%), reflecting the organization’s efficient management of operating expenses, despite the challenges associated with increased Business activity. The net profit margin for FY24 was 4.2% (FY23: 4.6%), influenced by higher profit before interest and taxes (FY24: PKR 1,038mln, FY23: PKR 721mln). This indicates that while operating profitability remained robust, certain factors such as financing costs or tax implications slightly impacted the bottom-line margins. Overall, these results underscore the Business's resilience and capability to adapt to a dynamic market environment while maintaining profitability

The sponsors have plans to expand the capacity of the rice mill in the near future, aligning with their strategic vision for growth and increased operational efficiency.

Working capital represents the net resources available to a Business for managing short-term obligations and supporting operational requirements. Current assets, including inventory days, play a critical role in determining working capital need.  The working capital management of the Business is supported through short-term Export Refinancing Facility- Part II. Inventory turnover efficiency improved during FY24, with inventory days reducing to 9 days (FY23: 10 days). This improvement reflects the Business’s enhanced inventory management practices, ensuring quicker stock rotation and optimized working capital utilization. Such efficiency contributes to better cash flow management and overall operational effectiveness. Trade receivable days improved to 17 days during FY24, compared to 19 days in FY23. This reduction demonstrates the business's enhanced efficiency in managing its receivables and ensuring timely collections from customers. The Business operates without trade payables, reflecting its strategy of managing procurement through upfront payments or maintaining cash-based transactions with suppliers. As a result of these improvements, net working capital days further declined to 26 days in FY24, compared to 28 days in FY23. This demonstrates the Jasons Commodities’s ability to efficiently manage its short-term assets and liabilities, ensuring a robust financial position and operational sustainability.

The Debt Coverage Ratio analysis provides valuable insight into the Business’s capacity to meet its debt obligations through its Free Cash Flow to Operations (FCFO), reflecting its financial stability and creditworthiness. FCFO of the Business increased and stood at PKR 855mln during FY24 (FY23: PKR 600mln). However, finance cost increased to PKR 87mln during FY24 (FY23: PKR 36mln) leading to a decrease in coverages (FY24: 9.8x, FY23: 16.7x). This indicates a modest reduction in the ability of Jasons Commodities to cover its debt servicing costs, primarily due to the higher finance expenses. The decline in the Debt Coverage Ratio is a credit negative development. While the increase in FCFO is a positive factor, the significant rise in finance costs has eroded the Business's ability to comfortably service its debt obligations. Maintaining stable and sufficient FCFO to consistently cover debt service obligations is crucial for the Business to maintain a strong credit profile

The Capitalization Ratio analysis gauges the proportion of a Busi's capital structure financed through debt, offering insights into its long-term financial leverage and risk profile. Total debt of Jasons Commodities stood at PKR 1.4 billion during FY24 (FY23: PKR 1.2 billion), entirely consisting of short-term borrowings. The Business's Leverage stood at 54% during FY24 (FY23: 66%) due to increased equity (FY24: PKR 1.2 billion, FY23: PKR 670 million). While the reduction in leverage is a positive credit development, the Business's reliance on short-term debt presents a key credit risk. Maintaining adequate liquidity and ensuring consistent cash flow generation will be crucial for the Business to successfully manage its debt obligations and maintain a stable credit profile.