Warble (Pvt.) Limited

CREDIT RATING REPORT | Mar-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
21-Mar-25 BBB A2 Stable Upgrade -
21-Mar-24 BBB- A2 Stable Maintain -
21-Mar-23 BBB- A2 Stable Maintain -
31-Mar-22 BBB- A3 Stable Maintain -
26-Aug-21 BBB- A3 Stable Maintain -
About the Entity

Warble (Pvt.) Ltd. ('Warble' or 'the Company') was incorporated in 1995 as a Private Limited Company, offering a variety of agri-based productions ranging from urea and DAP-based fertilizers to pesticides and seed varieties. The Company’s plant is located at Industrial Estate Multan. Warble operates through a network of over 750 franchises spread across the country. The Company is majority-owned by Mr. Masood Ur Rehman (~46.85%) and Mr. Zain Iftikhar (~43.83%); the rest of the shares vest between Mr. Atta ur Rehman (~7.69%), Ms. Ghazala Asmat Ghazal (~1.63%) (w/o Ch. Iftekhar Niaz– Group Chairman). Mr. Masood ur Rehman, the BoD's Chairman and the CEO of the Company, is assisted by a team of professionals.

Rating Rationale

Warble (Pvt.) Limited’s (“Warble” or “the Company”) rating is underpinned by the consistent support it receives, owing to the synergistic benefits from the Group. The Company’s prudent decision‐making framework, in tandem with its healthy topline, is reflected in the entity’s ratings. Further, operational synergies have led to increased margins and augmented profitability. Warble primarily produces and sells three different segments of agri‐based products, namely I) Pesticides, ii) Fertilizers, and iii) Seeds. The raw materials for pesticides are procured predominantly from China and Europe, while the raw materials for fertilizers are procured locally. The Company maintains a well‐integrated network of over 750 franchises nationwide. Moreover, the Company expanded its product portfolio by incorporating locally produced biofertilizers to become cost-effective and efficient substitutes for urea and DAP-based fertilizers. Additionally, the Company is diversifying its revenue stream in the construction business through a group-owned company (i.e., Warble Constructions). To effectively mitigate business risks, the Company employs a streamlined procurement approach. It reinforces its business presence in the Punjab region, enabling the Company to sustain a healthy top line with margins and, in turn, profits to remain intact. However, fluctuations in raw material prices owing to PKR depreciation and the fragmented & competitive nature of the pesticide industry embed challenges. On the financial risk front, improved liquidity and debt coverage indicators support the Company's financial position. Further, the ratings continue to derive strength from the long‐standing experience of the sponsors, who have established a track record for operations and a strong competitive position.

Key Rating Drivers

The ratings are dependent upon an improvement in the business and financial profile of the Company. Any deterioration in the topline, margins, or cashflows remains critical to the ratings. The Company’s sustained business performance remains vital to the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Warble (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Warble (Pvt) Limited ('the Company’) is a private limited company incorporated in 1995 under the Companies Ordinance 1984 (now the Companies Act 2017).


Background

Allahdin Group of Companies (‘the Group') is among the leading players in the pesticide sector. The Company was the second company set up by the Group. While the sponsoring family primarily focused on the construction business, one of the siblings possessed extensive experience in the agriculture industry, bringing valuable expertise.


Operations

The Company's activities involve imports, formulations, manufacturing & marketing of all kinds of pesticides (Insecticides, Herbicides, Fungicides, Insect Growth Regulators), fertilizers and micronutrients (liquid & granules), plant growth regulators, seeds of different field crops & vegetables, etc. The Company's head office is in Lahore, and the formulation facility is at Industrial Estate Multan, which is equipped with Chinese machinery and technology. The Company operates and sells its products through its franchise network titled Agro-Mart.


Ownership
Ownership Structure

The Company's ownership transitioned to the new generation. Mr. Masood ur Rehman possesses a majority shareholding of ~47%, followed by Mr. Zain Ifterkhar with ~44%, Mr. Atta ur Rehman with ~7%, and Ms. Ghazala Ghazni holds ~2% stake of the Company.


Stability

Although there is no formal succession plan, the ownership of the Company rests among the family members, with the next generation now having control over the respective companies their predecessors had control over.


Business Acumen

The Company has a strong history of succeeding in agriculture. They have created synergies throughout Pakistan by using cutting-edge technology and providing one-of-a-kind services. The Group is equipped with people with vision, wisdom, and unique skills.


Financial Strength

The Group's history dates back to the 1990s and holds vested business interests in agriculture, bottling, and the pharmaceutical industry. The Group will support the Company if need be.


Governance
Board Structure

The control of the Company vests with a three-member Board dominated by the sponsoring family with two Executive Directors and one Non-Executive Director.


Members’ Profile

All members have been with the organization for a long time. Mr. Masood possesses significant knowledge, expertise, and skill set and has over a decade of experience in the pesticide sector. He is the Chairman & Chief Executive of the Company. 


Board Effectiveness

The Board meets frequently, and minutes are documented as per the requirement. However, no Board committees exist to assist the Company's Board.


Financial Transparency

The External Auditors of the Company, M/S. HLB Ijaz Tabussum & Co., Chartered Accountants, a "B" category QCR-rated firm, expressed an unqualified opinion on financial statements for the period ended FY24.


Management
Organizational Structure

Business operations are divided into four key functions, namely: (i) Sales & Marketing, (ii) Finance, (iii) HR & IT, and (iv) Taxation & Accounts. The reporting lines converge to the CEO, who is the man at the last mile, i.e., the key decision maker.


Management Team

Mr. Masood Ur Rehman is the CEO of the Company and possesses the required knowledge, expertise, and skillset. He has been with the business for a long time and is assisted by a team of professionals.


Effectiveness

Management meetings are conducted as needed, with senior management contributing their insights to the decision-making process. Ch. Iftikhar Nazir serves as the ultimate authority in all decision-making matters. The Company does not have any formalized management committees in place.


MIS

The Company has built an in-house ERP system, incorporating required modules like inventory, sales & marketing, finance, procurement, HR, etc. It generates reports on a daily, weekly, and monthly basis.


Control Environment

The frequent meetings at the management level demonstrate that the Company's monitoring and evaluating systems are appropriate. The monthly and quarterly MIS reports of the Company include detailed segments and product performance data is evaluated monthly by senior management.


Business Risk
Industry Dynamics

The agricultural sector plays a pivotal role in Pakistan's economy, contributing ~25% to the GDP and serving as a crucial source of raw materials for various industries. The industry heavily relies on pesticides to enhance crop protection and cultivation practices (Agro Chemicals). The pesticide sector significantly depends on imports as ~85-90% of raw material is imported from China. In FY23, the pesticide industry's estimated value stood at ~PKR 103.7bln, marking a YoY increase of ~5.4%. This growth is attributed to the overall expansion of the crops sector and the subsequent rise in demand. Additionally, increased prices have further contributed to this upward trend. In FY23, pesticide imports reached around ~PKR 36bln, reflecting a ~19% YoY increase. Among these imports, insecticides accounted for the majority. The sector's overall leveraging remains adequate, with stable coverage ratios. Going forward, the sector's overall outlook is expected to remain stable


Relative Position

Allah Din Group overall holds a strong market position and brand image in the industry.


Revenues

The Company maintains a healthy topline reporting at ~PKR 2,887mln in FY24, witnessing growth of ~7.2% on YoY (6MFY25: ~PKR 1,259mln, FY23: ~PKR 2,692mln, FY22: PKR 2,495mln). The Company maintains a well-integrated network of over 750 franchises nationwide. Improvement in revenue was majorly attributed to price hike of finished products. The large product base in different segments enables the diversification of revenue streams through regular product launches.


Margins

During FY24, the gross profit margin of the Company stood at ~18.5% (FY23: ~18.9%) experienced a slight decline. This decline can be attributed to a higher percentage increase in the cost of goods sold when compared to the sales. This trend of high costs followed when the Company witnessed a slight increment in its operating costs, reducing its profit margin, which stood at ~9.3% in FY24 (FY23: ~9.7%). This trickle-down effect impacted the net profit margins of the Company, which was reported at ~2.7% in FY24 (FY23: ~2.2%) owing to lower finance costs incurred during the period under review.


Sustainability

Going forward, the management will focus on sustaining its cost leadership and performance uptrend. The Company is securing its business by registering its farmers and providing them with pesticides and, in return, purchasing their crops. The idea was implemented in the cotton and wheat segments. Furthermore, management plans to maintain a real estate business through a group company, Warble Constructions, to diversify its revenue stream.


Financial Risk
Working capital

As of FY24, the Company reported an increase of ~22 days in its net working capital days, reporting at ~205 days (FY23: ~183 days), raising concerns about the increased duration in which the Company's money is tied in its net working capital. Evaluating the components, it was observed that the average days in inventory decreased by ~11 days to ~126 days (FY23: ~137 days), reflecting the improved conversion of inventory into sales. Furthermore, the average days in trade payables also reported a decline of ~13 days to ~58 days (FY23: ~71 days). This decline reflects quicker payment to suppliers, which raises cash flow concerns due to quicker outflow. Lastly, average days in trade receivables rose by ~20 days to ~137 days (FY23: ~117 days), signifying an extended period for collecting cash from sales reflecting inefficiency. Overall, the increase in net working capital days raises working capital and cash flow concerns, and going forward, the Company needs to implement strategies to improve its receivable collection and overall cash flows.


Coverages

Warble maintains a satisfactory liquidity profile, primarily supported by the Free Cash Flow from Operations (FCFO), which stood at ~PKR 268mln (FY23: ~PKR 254mln). Further, the Company faced a slightly reduced impact on its liquid coverage ratio due to reduced finance costs reported at ~PKR 126mln in FY24 (FY23: ~PKR 130mln), yielding in the interest coverage ratio (FCFO / Finance Cost), which stood at 2.3x in FY24 compared to 2.0x in FY23, the Company consistently exhibits the capability to cover its interest expenses sufficiently. Looking ahead, the expectation of reduced policy rates may potentially lead to reduced finance costs.


Capitalization

Warble maintains a moderately leveraged capital structure with a leverage ratio of 32.6% in FY24 (FY23: ~31.7%). The ratio has increased slightly due to increased total borrowings reported at ~PKR 1,115mln (FY23: ~PKR 1,037mln). At the same time, the equity grew and stands at ~PKR 2,309mln (FY23: ~PKR 2,231mln) due to profit accumulation. As of 6MFY25, the leverage ratio was reported at ~27.1%, with total borrowings declining to ~PKR 873mln and equity rising to ~PKR 2,355mln.
 
 

Mar-25

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Warble (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 975 974 932 317
2. Investments 0 0 0 0
3. Related Party Exposure 478 478 478 478
4. Current Assets 2,331 2,649 2,511 2,137
a. Inventories 687 969 1,023 998
b. Trade Receivables 1,036 1,181 983 744
5. Total Assets 3,785 4,102 3,922 2,932
6. Current Liabilities 525 648 643 725
a. Trade Payables 336 436 477 577
7. Borrowings 873 1,115 1,037 706
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 31 31 12 9
10. Net Assets 2,355 2,309 2,230 1,492
11. Shareholders' Equity 2,355 2,309 2,231 1,492
B. INCOME STATEMENT
1. Sales 1,259 2,887 2,692 2,487
a. Cost of Good Sold (986) (2,354) (2,185) (2,036)
2. Gross Profit 273 533 508 451
a. Operating Expenses (126) (265) (245) (229)
3. Operating Profit 147 267 262 222
a. Non Operating Income or (Expense) (5) (7) (5) (8)
4. Profit or (Loss) before Interest and Tax 143 261 257 214
a. Total Finance Cost (81) (126) (130) (79)
b. Taxation (16) (57) (69) (27)
6. Net Income Or (Loss) 46 79 58 108
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 153 268 254 220
b. Net Cash from Operating Activities before Working Capital Changes 72 143 124 141
c. Changes in Working Capital 101 (115) (9) (69)
1. Net Cash provided by Operating Activities 173 28 116 71
2. Net Cash (Used in) or Available From Investing Activities 0 (3) 9 6
3. Net Cash (Used in) or Available From Financing Activities (14) (56) (44) (43)
4. Net Cash generated or (Used) during the period 160 (31) 81 35
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -12.8% 7.2% 8.2% 9.3%
b. Gross Profit Margin 21.7% 18.5% 18.9% 18.1%
c. Net Profit Margin 3.7% 2.7% 2.2% 4.3%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 20.2% 5.3% 9.1% 6.1%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 3.9% 3.5% 3.1% 8.7%
2. Working Capital Management
a. Gross Working Capital (Average Days) 281 263 254 256
b. Net Working Capital (Average Days) 225 205 183 171
c. Current Ratio (Current Assets / Current Liabilities) 4.4 4.1 3.9 2.9
3. Coverages
a. EBITDA / Finance Cost 2.3 2.6 2.3 3.3
b. FCFO / Finance Cost+CMLTB+Excess STB 1.6 1.8 1.6 1.8
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.5 0.5 0.4 0.6
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 27.1% 32.6% 31.7% 32.1%
b. Interest or Markup Payable (Days) 0.0 0.0 0.0 0.0
c. Entity Average Borrowing Rate 15.5% 11.8% 15.3% 11.1%

Mar-25

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Warble (Pvt.) Limited

rating scale

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Mar-25

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Warble (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
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    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  5. Monitoring and Review
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    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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Mar-25

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