Press Release

VIS Reaffirms Entity Ratings of Matco Foods Limited

Lahore, December 29, 2023: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Matco Foods Limited (MFL) at ‘BBB+/A-2’ (Triple B Plus /A-Two). The long-term rating of ‘BBB+’ signifies adequate credit quality with reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 12, 2022.
MFL primarily engages in the processing and export of rice and associated products. These encompass Basmati rice, Irri rice, Rice glucose, and Rice protein. Additionally, the Company markets various food items under the brand name Falak. MFL has ventured into the Corn Starch business recently. The Company's operations span five rice processing and milling plants, incorporating paddy drying, storage, husking facilities and also a corn starch plant.
Rice is one of the major staple foods and agriculture export of the country. Rice production decreased mainly due to floods affecting overall production levels and adversely affected exports levels in FY23. With better crop projected in FY24, exports are expected to increase, going forward. Rice being an internationally traded commodity the assigned ratings take into the account the natural cyclicality in its availability which has a bearing on its business risk.
The company exhibited growth in sales over the years. Net sales depicted a ~62% growth during FY23 mainly on the back of higher product prices and sales emanating from the newly added cornstarch plant. MATCO remained largely resilient to last year’s floods due to its predominant market presence in the basmati rice category as its cultivation is primarily concentrated in the Punjab region while floods mainly affected area in Sindh province. MATCO’s customer base for basmati exports are spread across 49 countries worldwide. The pressure on gross and net margins was alleviated by higher product prices and higher exchange gain. Coverages and liquidity ratios have recently trended downwards, though above the minimum threshold. An increasing trend in gearing has been witnessed over the years. As the company has no plans to mobilize long-term financing in the medium term, the management is projecting gradual decrease in leverage indicators, going forward. The ratings remain sensitive to improvement in overall financial indicators.
For further information on this rating announcement, please contact the undersigned at 042-35723411-12 (8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates (May 2023)
VIS Issue/Issuer Rating Scale

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