Press Release
VIS Assigns Final Rating to Sukuk issue of Sunridge Foods (Private) Limited
Karachi, July 23, 2025: VIS Credit Rating Company Limited (VIS) has assigned final rating of ‘AAA’ (Triple A) to the proposed Sukuk issue of Rs. 2 billion of Sunridge Foods (Private) Limited (‘SFPL or ‘the Company’). Long term rating of ‘AAA’ indicates highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s debt. Outlook on the assigned rating is ‘Stable’. The previous preliminary rating action was announced on December 26,2024. SFPL has an entity rating of ‘BBB+/A3’ (Triple B Plus/A Three) announced on September 10, 2024.
SFPL is a wholly-owned subsidiary of Unity Foods Limited. The Company primarily focuses on processing wheat, flour, and rice, with flour being its main product. It also deals in sugar, salt, lentils, and pulses, with the majority of its sales occurring in the local market. The Company sells its products under the brand name ‘Sunridge’, directly to retailers, restaurants, hotels and a vast network of distributors spread across the country. SFPL manages three flour processing facilities and a rice-processing unit in the provinces of Sindh and Punjab. Additionally, SFPL possesses storage facilities in Punjab and Sindh.
SFPL has issued a Rs. 2 billion Sukuk at a price of 6M Kibor + 0.70% on May 19,2025 to finance capital expenditures, including expanding wheat storage capacity, installing renewable energy solutions, and enhancing production infrastructure through equipment upgrades and facility improvements. The Sukuk, with a five-year tenor and a two-year grace period, will also support the Company’s working capital needs.
Assigned Sukuk rating is supported by its security structure backed by guaranteed principal amount of Rs 2.0 billion by Infrazamin Pakistan Limited (IZP). IZP is a ‘AAA’ rated, for-profit credit enhancement guarantee company, backed by InfraCo Asia (60%) and Karandaaz Pakistan (40%). Established to support private infrastructure development, IZP operates under the Private Infrastructure Development Group (PIDG), a global initiative funded by six governments and the IFC. Additionally, the Sukuk is secured through an exclusive lien on Finance Payment Account which is to be funded each month with 1/6th of the installment amount, maintenance of Finance Service Reserve Account, holding two semi-annual installments in a Bank/AMC account, under the lien of the Trustee and hypothecation charge over all present and future fixed and current assets of the Borrower for the value of PKR 1,000 million. Furthermore, the Company has to remain in Compliance with Private Infrastructure Development Group (PIDG’s) Disclosure Policy and Procedures, Anti-corruption and Integrity Policy and Procedures, and Environmental and Social Policies and Procedures.
The Company posted topline growth in FY24, driven by higher volumes and price increases. However, profitability declined due to compressed margins, impacted by elevated operating expenses and financial charges. In 9MFY25, gross margins recovered on the back of lower raw material costs, while reduced operating expenses, lower finance cost and higher other income supported a return to profitability, improving net margins. Liquidity remained constrained, though coverage metrics improved, including debt service coverage. Nonetheless, rising gearing and leverage continue to impact the capitalization profile. Sukuk proceeds are expected to ease pressures, but maintaining stable liquidity and capitalization profile will remain important for rating.
For further information on this rating announcement, please contact the undersigned at 042-35723411-12 or email at info@vis.com.pk.
Applicable Rating Criteria:
Corporates Rating Methodology
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Instrument rating
https://docs.vis.com.pk/docs/Rating-the-Issue-Aug-2023.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf