Press Release

VIS Upgrades Short-Term Entity Rating of Haleeb Foods Limited

Lahore, January 23, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the short-term entity rating of Haleeb Foods Limited (HFL) from ‘A-2’ (A-Two) to ‘A-1’ (A-One). The medium to long-term rating has been maintained at ‘A-’ (Single A Minus). The short-term rating of ‘A-1’ indicates high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. The medium to long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on September 23, 2022.

HFL established in 1984, is the pioneer of packaged milk in the local dairy sector. The company operates as a subsidiary of Mega Foods (Pvt.) Limited while the sound sponsor profile is incorporated in the assigned ratings. HFL offers a diverse product portfolio, including UHT milk, tea whitener, fruit juices, a variety of fat-based products, and related dairy items. The packaged milk industry in Pakistan faces intense competition, even though it accounts for around 10% of the overall milk consumption. Untapped loose milk market represents significant growth opportunity for the packaged milk industry players given price competitiveness.

Assessment of financial risk profile takes into account consistent growth in topline. The growth in sales was primarily driven by higher prices and increase in demand for some products. Import constraints and currency devaluation prompted the company to produce and utilize skimmed milk powder (SMP) locally. The company has also signed agreements with some other companies for the supply of powdered milk. Higher gross margins and cost-saving initiatives supported operating profit. Despite increase in finance cost, net profit increased significantly on account of higher sales and net margins in FY23. According to the management, if the increasing trend in product prices continues, it may adversely impact volumetric sales or margins of market players, going forward. Coverages improved further while overall liquidity profile remained sound. The company's debt structure is skewed towards short-term credit, with no reliance on long-term borrowings. Leverage indicators remained manageable. Ratings remain dependent on sustained profitability amid adequate coverages and low gearing and also maintenance of short-term investments which are available with the company.

For further information on this rating announcement, please contact the undersigned at 042-35723411 (Ext. 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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