Press Release
JCR-VIS assigns initial entity rating of BBB/A-3 with a Positive Outlook to Matco Rice Processing (Pvt.) Limited
Karachi, April 5, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned an initial entity rating of ‘BBB/A-3’ (Triple B / A-Three) to Matco Rice Processing (Pvt.) Limited (Matco).
Matco is one of the leading players in the Basmati rice export market. After crossing the $2 billion export mark, rice has become the second largest export commodity of Pakistan after textile. Pakistan is one of the major producers of rice and on account of low per capita domestic consumption more than 50% of the total production is exported. Major export markets include Middle East and Iran. In Basmati rice export, Pakistan faces competition primarily from India, which is the only other producer of the variety. However, on account of higher export prices and local consumption in India, Pakistan has surpassed India in rice exports. The industry has experienced volatility with prices peaking in FY09 and dipping in the ongoing financial year leading to fall in margins. The downward trend in prices has abated in recent months and has also been offset to an extent by fall in raw material prices and the impact of rupee depreciation.
Given currently low price levels, the management has taken steps to improve profitability through continued focus on brand development; increasing volumes through active marketing/capacity enhancement and lowering cost of production through ongoing capital expenditure for backward integration. In view of these measures Outlook on the assigned rating is ‘Positive’. Institution of corporate governance principles on a voluntary basis; improvement in capitalization levels and achievement of target performance levels may further improve the risk profile of the company going forward.
For further information on this rating announcement, please contact the undersigned (Ext: 501) or Mr. Safdar Kazi (Ext: 604) at 021-35311861-70 or fax to 021-35311873.
Javed Callea
Advisor