Press Release
VIS Reaffirms Entity Ratings of Staple Foods Private Limited
Karachi, May 26, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Staple Foods Private Limited (“SFPL” or “the Company”) at 'A/A1' (’A’/‘A One’). Medium to long term rating of 'A' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A1' indicates a strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The outlook on the assigned rating is ’Stable’. Previous Rating action was announced on May 08, 2024.
SFPL was established in 2000 as a sole proprietorship and later converted into private limited Company in 2007. SFPL is a family-owned business with major shareholding vested with Mr. Imran Rasheed. Head office of the Company is situated in Karachi. Principal business activity of the Company is processing, milling and sale of variety of rice along with small scale setup of selling lentils, pickles and spices. The board comprises three directors including the CEO. Overall board composition and oversight has room for improvement.
Assigned ratings incorporate the business risk profile of Pakistan’s rice sector, which remains influenced by challenges related to raw material availability and international freight charges. Fluctuations in freight costs, influenced by competition and demand-supply dynamics, continue to pose a key risk for rice exports. Additionally, the lifting of export restrictions by India has intensified market competition, increasing price volatility. Nonetheless, growing global population supports long-term demand prospects.
On the financial front, the company exhibited significant revenue growth during FY24 due to higher exports as it was able to take advantage of leftover market share by India due to the export restrictions. The company also maintained a strong liquidity profile and coverages which was supported by an improvement in the internal cash generated by the company and the settlement of short-term debt. Moreover, the capitalization profile remained conservative with further improvement in leverage indicators. Going forward, sales are projected to remain subdued mainly due to oversupply scenario in the international market, an outcome of ban lift by India. However, the Company is expected to finance its working capital requirements primarily from internal sources while maintaining a low leveraged capital structure and sound coverages. The company’s liquidity profile is also projected to remain strong.
Going forward, ratings will remain sensitive to the company’s continued ability to maintain a conservative capitalization profile. Moreover, the management’s ability to maintain sound profitability, coverage and liquidity metrics will also be important considerations for future reviews.
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