Press Release

VIS Revises Ratings of Shakarganj Food Products Limited

Karachi, November 23, 2020: VIS Credit Rating Company Limited (VIS) has revised the entity ratings of Shakarganj Food Products Limited (SFPL) from ‘A-/A-2’ (Single A-Minus/A-Two) to ‘BBB+/A-3’ (Triple B Plus/A-Three). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-3’ denotes timely payment of obligations coupled with satisfactory company fundamental and liquidity factors. VIS has also revised the instrument rating from ‘A’ (Single A) to ‘BBB+’ (Triple B Plus). The instrument rating has been equated with the medium to long-term entity rating due to restructuring arrangement under the purview of relief package announced by SBP and SECP, whereby the principal repayment has been deferred by one year. Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Negative’. Previous rating action was announced on July 18, 2019.
The ratings assigned are underpinned by the sponsor profile, comprising renowned business concerns, particularly BankIslami Pakistan Limited - also a related party. Business risk profile of the company is considered moderate on account of increasing competition in value-added dairy and challenging operating environment of the organized dairy segment, leading to range bound margins. Moreover, the industry margins remain sensitive to exchange rate risk and price risk pertaining to imported skimmed milk powder and edible oils.
The company’s net revenue was recorded lower during 9MFY20 largely due to depressed volumes and selling prices for the key products, particularly in the tea whitener category. Volumetric sales of tea whiteners were impacted by the supply chain disruption and closure of offices, schools, colleges, tourist spots, and dhabas owing to the outbreak of COVID-19. The ratings also factor in contraction of profit margins due to significant increase in raw material prices, including skimmed milk powder, raw milk and vegetable fats, coupled with largely stagnant selling prices of key products owing to strong competition amongst major players to retain market share and growth. Resultantly, liquidity and debt coverage indicators have weakened considerably due to operating losses during 9MFY20. Due to increase in overall debt burden and higher trade payables, the gearing and debt leverage ratios have also increased by end-9MFY20.
For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 201) or email at

Faryal Faheem Ahmed
Deputy CEO

VIS Entity Rating Criteria: Corporates (May 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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