Press Release
VIS Assigns Preliminary Rating to Proposed Short Term Sukuk 2 of Matco Foods Limited (MFL)
Karachi, November 05, 2026: VIS Credit Rating Company Limited (VIS) has assigned a preliminary rating of ‘A1 (plim)’ (A one preliminary) to proposed Short-Term Sukuk 2 issue of up to PKR 1 billion 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. MFL is selling its products under the brand name ‘ Falak’. The Company's products include predominantly basmati rice, rice glucose, rice protein, rice maltodextrin. 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. Matco Foods has a 49% ownership in Barentz Pakistan Private Limited which is engaged in the business of processing and export of rice, glucose, protein and flour, manufacturing, general trading, exports/imports. During FY2026, Matco Foods Limited implemented a corporate restructuring and business carve-out effective July 1, 2025, under which its Corn Starch and Consumer Foods (Falak Masala) businesses were transferred to two wholly owned subsidiaries, Matco Corn Products (Private) Limited (MCPPL) and Falak Foods Limited (FFL), respectively.
The Company plans to issue a short-term, rated, secured, privately placed sukuk (STS-2) of up to Rs. 1.0 billion for a tenor of six (06) months for financing short term working capital requirements related to the procurement of paddy. 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. The proposed instrument will be secured against a ranking charge over company’s current assets with a 25% margin. The issuer shall maintain a dedicated Debt Payment Account (DPA) under lien wherein 10% of the issue size will be placed under lien in shape of cash or government Islamic instruments), while 25% of the remaining scheduled payment shall be funded at least 30 days prior to the profit payment date, and an additional 65% shall be funded at least 7 working days prior to the profit payment date. Previously Matco had issued an STS (STS-1) on a relatively similar structure, (only upfront was previously 15%) for PKR 2.5b in February 2026 which was settled duly on maturity in August 2026.
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), Historically, earnings were diversified across rice exports, corn starch, and ‘Falak’ branded foods, which supported margins and resilience during rice market volatility. However, the carve-out of corn starch and ‘Falak’ businesses has concentrated MFL’s operations in rice exports, resulting in increased sensitivity to commodity price and export demand fluctuations. Financial risk is marked by high leverage and gearing, which constrain profitability. In FY26, revenue of the rice segment declined due to lower export sales of basmati rice, however gross margin improved indicating improved margin realization and a favourable product mix. The debt service coverage remained stable supported by a higher FFO and the liquidity remained adequate. Assigned ratings are underpinned on planned deleveraging through the proposed divestment of the Barentz stake alongside negotiations for the sale of three fixed assets, including godowns and a small unit at Sadhoke.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates
https://docs.vis.com.pk/Methodologies-2026/Corporate-Rating-2026.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2026/IRM-2026.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf