Press Release
VIS Assigns Preliminary Rating to Proposed Short Term Sukuk 1 of Matco Foods Limited (MFL)
Karachi, February 12, 2026: VIS Credit Rating Company Limited (VIS) has assigned a preliminary rating of ‘A1 (plim)’ (A one preliminary) to proposed Short-Term Sukuk 1 issue of up to PKR 2,500 million (inclusive of a Green Shoe Option of PKR 1,000 million) of Matco Foods Limited (‘MFL’ or the ‘Company’). The short-term rating of ‘A1 (plim)’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The preliminary rating will be finalized upon review of final legal documents. The entity ratings of the Company are ‘A-/A2’ (‘A Minus/ A Two’) with a ‘Stable’ outlook announced on January 01,2026.
Matco Foods Limited (MFL) or ('the Company') was incorporated on April, 1990 in Karachi as a private limited Company and listed on Pakistan Stock Exchange Limited on February, 2018. The Company business primarily engages in the processing and export of rice and associated products. The Company also provides a complete line of corn starches and corn based animal nutrition products. In addition, Matco also provides a wide variety of culinary and convenience food items. The Company's products include predominantly basmati rice, rice glucose, rice protein, rice maltodextrin, corn starch, Himalayan pink salt, and other gourmet salts, spices, dessert mixes, and many more. The Company's operations span five rice processing and milling plants, incorporating paddy drying, storage, and husking facilities situated in Sadhoke, Punjab, and Karachi, Sindh while the Corn Starch plant is located in Faisalabad, Punjab. During the year, the Board approved the separation of two divisions — the Corn Starch Division and the Falak Foods Division — into wholly owned subsidiaries, namely Matco Corn Products (Private) Limited and Falak Foods (Private) Limited.
The Company is planning to issue a short-term, rated, secured, privately placed sukuk 1 of up to Rs. 2.5 billion (inclusive of a Green Shoe Option of Rs. 1 billion) for a tenor of six (06) months. The purpose of the sukuk is to support the company’s short term working capital requirements related to the procurement of paddy. The profit rate will be average 6 month KIBOR prevailing on the base rate date+ 100 bps p.a. The base rate will be set on the last working day prior to the issue date. Profit will be payable at the time of redemption of short term sukuk on the outstanding principal amount. Such profit payment will fall six months from issue date. The principal is to be redeemed as bullet payment (six months) after the issue date. There is going to be a ranking charge over company’s current assets with a 25% margin. The issuer shall maintain a dedicated debt payment account under lien wherein 25% of the scheduled payment shall be funded at least 30 days prior to the profit payment date, and an additional 60% shall be funded at least 5 working days prior to the profit payment date. Lien would be equivalent to 15% of the issue size, on GOP short term Islamic instruments.
The assigned ratings reflect Matco Foods Limited’s (MFL) sound market position in Pakistan’s rice export sector, governance strength supported by experienced sponsors and International Finance Corporation (IFC), and improving profitability. Historically, earnings were diversified across rice exports, corn starch, and ‘Falak’ branded foods, which supported higher margins and resilience during rice market volatility. However, the ongoing carve-out of corn starch and ‘Falak’ businesses will concentrate MFL’s operations in lower-margin rice exports, resulting in the loss of historical margin advantage and increased sensitivity to commodity price and export demand fluctuations. Financial risk is marked by high leverage and gearing, which constrain profitability. In FY25, profitability and debt coverage improved, supported by cost efficiencies, margin gains, and operational optimization. Assigned ratings are underpinned on planned deleveraging through equity injection and internal cash generation, alongside efforts to improve gross and net margins in core operations.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf