Press Release

VIS Credit Rating Company Maintains Entity Ratings of Agro Processors and Atmospheric Gases Limited

Karachi, June 20, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Agro Processors and Atmospheric Gases Limited (APAG) at ‘BBB-/A-2’ (Triple B minus/A-Two). The medium to long term rating of ‘BBB-’ signifies adequate credit quality. Protection factors are reasonable and sufficient while risk factors are considered variable if changes occur in the economy. The short term rating of ‘A-2’ indicates good certainty of timely payments. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. The outlook on the rating has been revised from ‘positive’ to ‘stable’. The previous rating action of ‘BBB-/A-2’ with a positive outlook was announced on March 26, 2021.

APAG is engaged in the manufacture and sale of edible oil, banaspati & related products for both B2B (business-to-business) and B2C (business-to-consumer) markets. Assigned ratings are in line with the experience of the sponsors in the industry as well as with the business risk profile of the company. However, the ratings are constrained by the elevated gearing and leverage levels.

Following the equity injection in February 2021, the Company’s capitalization indicators exhibited improvement. However, the same remain on the higher side and in line with the assigned ratings. Deleveraging of balance sheet and improvement in profitability profile with onboarding of the new partner is expected over time and will remain important for ratings.

Pakistan’s edible oil industry exhibits intense competition, low barriers to entry as well as high fragmentation. Consequently, the pricing power is limited and margins remain thin. Since most of the raw material is imported, industry remains vulnerable to exchange rate fluctuations and volatility in commodity prices. However, the demand of this sector is relatively inelastic and with the lifting of lockdown and opening of the hotels, restaurants, and catering (HORECA) segment, demand prospects remain strong. APAG’s products exhibit strong brand equity, particularly in the retail segment.

In the backdrop of volatility in international pricing of raw material and the exchange rate fluctuations, the pressure on margins is expected to continue in the sector leading to variations in performance indicators. Debt constitutes a significant portion of the capital structure; debt leverage and gearing ratios remain higher than the peer average. Cash flow coverages as well as liquidity indicators remain constrained on the back of low profitability. Going forward, improvement in profitability as well as capitalization indicators will remain important for the ratings.

For further information on this rating announcement, please contact the undersigned or Ms. Sara Ahmed at 021-35311861-71 or email at

Sara Ahmed

VIS Entity Rating Criteria - Industrial Corporates (Aug 2021)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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