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Karachi, March 13, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/Single A-Two) to Staple Foods (Pvt.) Limited (SFPL). The medium to long-term rating of ‘A-’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy.
The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. SFPL is engaged in the business of processing and sale of Basmati and IRRI rice in international and local markets, with exports constituting more than 90% of the revenue stream on a timeline basis. The Company was incorporated in 2000 as a family-owned business. The Company’s processing and storage facilities are based in Port Qasim, Karachi, and Sindh.
The assigned ratings derive support from Company’s established position in brown basmati rice export market, which contributes nearly 40% to its export sales. Ratings also take into account well-established relationships with clients and fairly diversified region-wise exports sales. During the outgoing year, growth in topline was led by higher average prices despite subdued volumetric sales. Gross margins have also improved primarily due to favourable selling prices backed by overall competitiveness of rice exporters amid depreciating local currency.
The liquidity profile is underpinned by adequate cash flow coverage’s in relation to outstanding obligations and working capital management. The ratings also incorporate strong capitalization indicators reflective of Company’s conservative financial policy. Corporate governance structure provides room for improvement. Going forward, achieving sustained profitability and maintaining sound capitalization indicators will be important for ratings.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/
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