Press Release
VIS Reaffirms Entity Ratings to Asian Food Industries Limited
Karachi, April 07, 2025: VIS Credit Rating Company Ltd. (VIS) reaffirms entity ratings of Asian Food Industries Limited (AFI) at ‘A-/A2’ (Single A Minus/A Two). The medium to long term rating of ‘A-’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on February 21, 2024.
AFI is a family-owned business operating under the brand name ‘Mayfair’. Mayfair has a strong brand recognition in the local confectionary and biscuits market. AFI was the first in Pakistan to introduce bubble gum chews and deposited candies. The Company sells its products with a vast network of over 450 distributors and sub-distributors spread across the country.
Largely focused on the middle to upper middle segment of the growing population, mainly younger population, the business risk is classified as medium to low. The biscuits market is segmented into crackers, savory, and sweet biscuits to cater for changing consumer preferences towards health-conscious trends. A similar trend has been witnessed in the confectionery market with consumer preferring more healthier, premium and artisanal products options. Online accessibility has facilitated this shift, providing consumers with a wider range of choices to suit diverse preferences. The seasonal spikes in the local market sales, particularly during religious festivals, wedding seasons, and school vacations underscore the cultural significance and consumer demand driving the industry. The pricing dynamics of local food products, including those in the biscuit industry, are significantly influenced by the costs of major raw materials like sugar, wheat, edible oil, and potatoes as well as players relative position in the industry. Local industry reliance on imports for flavors and certain other components, suggests a complex interplay between local and global market forces in shaping the sector's growth and its operational strategies.
AFI has demonstrated resilience in a weak macroeconomic environment, achieving consistent revenue growth while effectively managing cost pressures. Increased sales volumes have been a key driver of profitability, supported by a strong marketing and distribution network. The Company's financial profile reflects improving coverage ratios and a stable cash conversion cycle, driven by a business model that emphasizes on advance payments for local sales.
Leverage levels have remained within manageable limits, supported by healthy cash reserves. While gearing is expected to increase due to planned long-term debt financing for capacity expansion, the Company’s overall financial risk profile remains low. Going forward Company's ability to maintain profitability and effectively manage expansion-related borrowing will be important for the assigned ratings.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf