Press Release

VIS Reaffirms Entity Ratings of Dairyland (Private) Limited

Karachi, November 17, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Dairyland (Private) Limited (DPL) at ‘A-/A-2’ (Single A Minus/A - Two). The long-term rating of ‘A-’ signifies good credit quality and adequate protection factors. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned rating is ‘Positive’. Previous rating action was announced on June 10, 2022.

DPL, having its own farm, is actively involved in the production, manufacturing and distribution of dairy products, with a significant emphasis on processed milk. The company operates under the 'Dayfresh' brand and offers a diverse product range. DPL operates under the umbrella of Akhtar Group of Companies, with the majority of its shares held by Akhtar Textile (Pvt.) Limited.

The demand for milk follows a seasonal pattern, with flush and lean periods occurring in the first and second halves of the year respectively. Despite this, the demand for milk shows low elasticity and remains relatively stable. Factors such as urbanization, an untapped market with significant growth prospects, favorable regulatory policies, and a rising middle class contribute to the increasing demand for packaged milk. Enforcing significant regulatory changes, such as implementing minimum pasteurization laws, could potentially address industry challenges more effectively. VIS is of the opinion that the advantages stemming from marketing initiatives will become evident over the medium to long duration.

Assessment of financial risk profile takes into account consistent growth in topline, driven by higher volumetric sales and rise in prices. DPL's ability to continually expand the milking herd size enabled it to effectively meet the evolving market demand. While the business risk factors remained manageable. Gross margins have remained stable through preceding years as the burden of the increase in prices was shifted on to the consumers. Going forward, the company expects to register growth on the back of the largely inelastic nature of demand and meet it through organic growth in its milking herd size. The company also plans to benefit from increasing awareness amongst people regarding milk hygiene and other factors such as increasing urbanization. However, competitive forces in the industry remain strong.

Cash flows and coverages exhibited some improvement. The company's equity base expanded through continuing support from its sponsors along with profit retention. Enhanced equity base despite slight increase in debt profile has kept the capitalization indicators at a manageable level. The projected improvement in sales, profitability, and coverages while maintenance of margins and gearing are considered important for the assigned ratings.
For further information on this rating announcement, please contact the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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