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Lahore, November 13, 2019 (PPI-OT): The ratings reflect the strong experienced background of the partners of Awami Agro Commodities (‘Awami’). The partners of the business are well equipped with the related sector knowledge. Growth centric strategy of the partnership encompasses maximizing the returns through expanding its export destinations, which it achieved through entering the West African region in FY19. Currently, Awami’s entire export of non-basmati rice vests in African countries. Awami has established two associated companies in Madagascar and Benin during the period under review which will add positively to revenue growth.
During FY19, Country’s rice industry observed a subtle growth, where rupee devaluation favoured the rice exporters to enhance the revenue base. Although there was uptick in profits. Awami could not translate the impact of revenue growth in its profits – proportionately – on account of higher operational cost, mainly elevated freight charges.
Consistent generation of healthy margins backed by the revenues continue to be a key performance indicator. As Awami is a partnership, governance structure reflects needs for improvement. Financial risk profile is driven by a bottom line centric approach with a good debt servicing capacity and a leverage capital structure. Debt profile entirely constitutes short term borrowings to manage working capital needs.
The ratings are dependent upon sustenance of margins and revenue growth. Lack of proper board structure is a concern. Sustainable profits, adequate cash flows and working capital cycle are majorly backed by reasonable turnover.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com