Shujabad Agro Industries (Pvt.) Limited ('Shujabad Agro' or 'the Company') is incorporated as a private limited company in Pakistan, since Feb 2000.

Mr. Ashfaq with his friend established a long-standing presence in the edible oil industry, beginning in 1990, specializing in the procurement and supply of various crude oils, including cottonseed, sunflower, soybean, and canola, to local refiners. In 2000, Mr. Shakil Ashfaq and Mian Abdul Wahid co-founded Shujabad Agro Industries (Pvt.) Limited. Initially focusing on B2B extraction and supply, the company subsequently expanded into the branded edible oil market. Today, Shujabad Agro competes in the premium segment with the "Eva" brand and the middle-tier segment with the "Maan" brand.

Shujabad Agro is primarily engaged in edible oilseed crushing/solvent extraction, refining, ghee manufacturing, and packaging of refined edible oil. The Company manufactures two different products (refined edible oil and meal) in four variants (cottonseed, sunflower, soybean and canola). The Company has three solvent extraction units located in Karachi. The seed crushing and oil refining capacity of the Company stood at 225,000MT and 135,000MT during FY24. Whereas actual production of seed crushing stood at 36,686MT during FY24 (FY23: 68,697MT). Also, the actual production of oil refining stood at 85,089MT during FY24 (FY23: 82,808MT).

Shujabad Agro is majorly ~60% owned by the family members of Mr. Shakil Ashfaq. The remaining ~40% of the shareholding resides with Ms. Bushra Asad.

Major ownership resides with Mr. Shakil's family. The Sponsors have also formally executed a shareholding agreement providing clarity on succession.

The Sponsors through their vast experience have become reliable partner for the consumer, hotel, retail, biscuit & confectionary and industry, by making the Company to consistently comply with the standards of high quality. The Company has successfully established its brand's position.

Shujabad Agro is a stable business entity. The Sponsors have substantial financial strength to support the Company, if needed. The Comapny has increased its paidup capital from PKR 292mln to PKR 5,361mln that provides strenghth to the Company.

Shujabad Agro's Board of Directors currently consists of a Non-Executive Director and an Executive Director. The absence of independent directors suggests a potential area for enhancement in the company's governance framework, specifically regarding independent oversight.

The Board's Chairman, Mr. Shakil Ashfaq has been associated with the Company since inception and is a veteran of the industry. He was the Chairman of All Pakistan Solvent Extractors’ Association (APSEA). He has served as the President of Bin Qasim Association of Trade and Industry (BQATI) and was a member of Executive Committee of Pakistan Vanaspati Manufacturers’ Association (PVMA).

During FY24, Shujabad Agro's Board of Directors engaged in discussions and strategic decision-making through informal meetings, with a majority of members in attendance. However, a formal record of these meetings, including documented minutes, was not maintained. This practice represents an area where governance procedures could be strengthened to ensure transparency and accountability in board deliberations and decisions.

The Board is supported by three key sub-committees that enhance its governance and operational efficiency. These include the Audit Committee, which oversees financial reporting and compliance; the Human Resource and Remuneration Committee, responsible for policies related to employee management, compensation, and development; and the Management Committee, which focuses on strategic planning and day-to-day operational matters. All divisional heads report directly to the CEO, Mr. Shakil Ashfaq, enabling effective communication, streamlined decision-making, and cohesive operational oversight across the organization.

Shujabad Agro external auditors, M/s REANDA Haroon Zakaria Aamir Salman Rizwan & Company Chartered Accountants, have expressed an unqualified opinion on the financial statements of the Company for the year ended FY24. The firm has been QCR rated by ICAP and are in auditors panel ‘B’ of SBP.

To perform well, Shujabad Agro has structured and organized its organogram as per the operational needs. The Company operates through four divisions: Production, Finance, Marketing and Sales. All Divisional Heads report to the Company’s CEO, who then makes pertinent decisions. As the Company’s CEO is responsible for the whole unit, thus highlighting the key man risk of management.

Shujabad Agro has an experienced & professional management. The Company’s CEO, Mr. Shakil Ashfaq laid the foundation of the Company. He has served as the President of Bin Qasim Association of Trade and Industry (BAQTI). He was a member of the Executive Committee of the Pakistan Vanaspati Manufacturers’ Association (PVMA). Mr. Shoaib Butt, the Company’s National Sales Manager, holds a diversified experience of more 20 years in both locals and multinational organizations. He has been associated with Shujabad Agro from 8 years. Mr. Muhammad Asim Hussain, GM Marketing, has an overall experience of 19 years. He has been associated with Shujabad Agro from past 10 years.

Management’s effectiveness and efficiency is ensured through the presence of management committees. At Shujabad Agro, an Executive Committee is formally in place. Pertinent matters of the Company are discussed in the meetings of Executive Committee and are documented as per requirement.

The Company use a customized software as per its needs. This software is regularly monitored. Moreover, to observe and evaluate the business activity a production sheet is also generated which is reviewed by the departmental heads and is submitted to the CEO. The Company prepares excel based reports. These reports are approved by CEO on weekly basis. However, monthly reports are also generated as per requirement.

To maintain and enhance operational efficiency, the Company has established an internal audit function. This function plays a key role in ensuring that the Company's established policies and procedures are effectively implemented and consistently monitored. The Head of Internal Audit reports directly to the Chief Executive Officer (CEO), providing a level of independence and ensuring that internal audit findings and recommendations are given appropriate attention at the highest level of management. This reporting structure strengthens the internal audit function's ability to provide objective assessments and contribute to improved governance and operational effectiveness.

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 imported. 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 hand, the price of palm oil stood at 873 USD/MT in Jun-24 and 816 USD/MT in Jun-23, which is 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 production, Total oilseed production in 2024/25 is projected to decrease marginally to 3.43 million tons, due to an expected minor decline in cottonseed production, and no growth in rapeseed and sunflower seed output. The industry's future outlook is developing due to price volatility and PKR depreciation.

Shujabad Agro has a substantial market share in Edible oil & Ghee scetor.

Shujabad Agro derives approximately 98% of its revenue from the local market. During FY24, the Company's revenue declined to PKR 36 billion compared to PKR 42 billion in FY23. This decrease was primarily driven by a reduction in sales volume, which stood at 112,928 MT in FY24, down from 140,710 MT in FY23. The decline in quantity sold is attributed to a decrease in sales of meal due to GMO ban.

Shujabad Agro exhibited a mixed financial performance in FY24. While the company successfully improved its gross profit margin from 10.3% in FY23 to 10.9% in FY24, this positive trend was accompanied by slight declines in both operating and net profit margins.  The enhancement in gross profit margin was driven by a significant reduction in the cost of goods sold from PKR 38 billion in FY23 to PKR 32 billion in FY24. This achievement was primarily attributed to optimized production processes and the effective utilization of solar energy, resulting in lower energy costs. However, operating profit margin declined from 7.2% in FY23 to 6.6% in FY24. This decrease can be attributed to increased selling & distribution expenses, which rose from approximately PKR 1.3 billion in FY23 to PKR 1.4 billion in FY24. While these investments are crucial for long-term growth, the incremental expenditure in FY24 marginally impacted the overall operating profitability. Furthermore, the net profit margin declined from 1.9% in FY23 to 1.5% in FY24. This decrease was attributed to a combination of factors, including a lower profit before interest and taxes (FY24: PKR 2.3bln, FY23: PKR 2.5bln) and a rise in finance costs(FY24: PKR 1.3bln, FY23: PKR 1.1bln). Moving forward, Shujabad Agro should carefully evaluate the return on its marketing investments and explore strategies to mitigate the impact of rising finance costs to ensure sustainable long-term profitability.

Going forward, growth in demand is anticipated in edible oil industry. The management is eyeing on expanding its crushing operations to incorporate BMR capability in order to utilize other seeds that are locally available in the market. The Company has also entered in luquid shortening with its brand " Bake Right."

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. Inventory days increased from 69 days in FY23 to 74 days in FY24, indicating a slight deterioration in inventory turnover. This is due to a decrease in the quantity sales that also leads to the holding cost. Trade receivable days increased from 60 days in FY23 to 69 days in FY24, indicating a deterioration in the company's ability to collect outstanding customer payments. This increase primarily stems from delayed payments from debtors. Days Payable Outstanding (DPO) increased significantly from 21 days in FY23 to 40 days in FY24, indicating a substantial delay in payments to the company's creditors. This extended payment cycle effectively frees up cash for a longer period, contributing to the reduction in Net Working Capital days. Following this trajectory, net working capital days of the Company stood at 103 days during FY24 (FY23: 108 days).

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 FCFO of the Company remained stable and stood at PKR 2bln during FY24. Whereas finance cost of the Company increased and stood at PKR 1,394mln during FY24 (FY23: PKR 1,132mln). This increase in the finance cost led to a decrease in the coverages of the Company that stood at 1.4x during FY24 (FY23: 1.8x). This indicates a diminished capacity to meet debt obligations through operating cash flow. Following this trajectory total coverage of the Company stood at 1.4x during FY24 (FY23: 1.7x). The debt payback ratio stood at 0.7x during FY24 (FY23: 0.5x). It suggests that it now takes longer for the company to generate sufficient cash flow to repay its debt obligations.

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. Total debt of the Company increased and stood at PKR 8bln (FY23: PKR 6bln). 95% of the Company’s debt consists on short term debt that stood at PKR 7bln during FY24 (FY23: PKR 6bln). Leverage of the Company increased and stood at 55% during FY24 (FY23: 53%) due to an increase in the borrowings of the Company. While increased leverage can potentially enhance returns for shareholders, it also comes with significant risks. The company needs to carefully monitor its debt levels, ensure it has sufficient cash flow to service its debt obligations, and proactively manage its refinancing risks.