Press Release

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

Karachi, August 23, 2023: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Agro Processors and Atmospheric Gases Limited (APAG) from ‘BBB-/A-2’ (Triple B Minus/A-Two) to ‘BBB/A-2’ (Triple B/ 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 is ‘Stable’. Previous rating action was announced on June 20, 2022.

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. Soya Supreme, the flagship product of APAG, is one of the oldest cholesterol-free ultra-high temperature (UHT) treated edible oil brands in the country. Major shareholding and management control of the Company rests with the Ghulam Hussain family, having longstanding experience in the business. VIS characterizes the business risk profile of the sector by high competitive intensity and fragmentation with low barriers to entry, resulting in limited pricing power and thin profitability margins.

Revision in entity ratings takes into account overall improvement in the financial risk profile of the Company despite challenging macroeconomic environment. Assigned ratings capture robust revenue growth, increasing margins, and improving gearing levels and cash flow coverages against obligations. Sizeable topline jump of 33% in FY22 was largely driven by higher average selling prices and change in sales mix towards premium products. As per management, with extensive focus towards exports and adequate number of orders in hand, revenue is expected to increase in all categories going forward. Margins depict an upward trend in the review period on the back of inventory gains. Given uncertain macroeconomic environment, maintenance of margins will be important from a ratings perspective. Ratings incorporate Company’s conservative strategy to utilize self-financing for higher working capital needs through sale of subsidiary shareholding. With profit retention, gearing levels showcased improvement in the review period. However, leverage ratio remain elevated due to high trade and other payables. Given no major capital investment planned for the rating horizon, capitalization indicators are expected to remain within manageable levels. Liquidity profile of the Company improved with DSCR strengthening due to increasing profits and limited growth in debt levels. Moreover, given the challenging market dynamics, further improvement of financial risk profile over the rating horizon will be important for ratings.

For further information on this rating announcement, please contact Ms. Asfia Amanullah (Ext: 212) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

Applicable Rating Criteria: Corporates (May 2023)

VIS Issue/Issuer Rating Scale:

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