Press Release

VIS Maintains Entity Ratings of At-Tahur Limited

Karachi, June 12, 2023: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of At-Tahur Limited (ATL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ suggests good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital market is good. Risk factors are small. Outlook on the rating is revised from ‘Stable’ to ‘Negative’ mainly on account of pressure on cash flow coverages. The previous rating action was announced on April 20, 2022.
The company operates dairy farm for the production and pasteurization of milk, manufacturing of dairy products, and managing cold chain and its logistics. Currently, the product portfolio of the company comprises whole milk and low-fat pasteurized milk, range of yogurt, range of laban, flavored milk, lactose free milk, butter, desi ghee and cheese. The packaged milk industry in Pakistan represents only 10% of the overall milk consumption, however, faces intense competition among the packaged milk players. Loose milk dominates the market. Regulatory changes, such as minimum pasteurization laws, could address industry challenges. ATL on the back of strong brand equity and a well-diversified product range has shown growth over the years. The company has recently diversified into non-dairy products. In this context, the company has introduced mango nectar and peach ice-tea in the local market.
During FY22 and onwards, the growth in revenue was attributed to a combination of price increases and higher sales volumes. The gross margins excluding net gain arising at time of milking improved owing to higher sales of raw milk and yoghurt while the company also managed to earn good margins on the sale of raw milk during the demand season. Going forward, margins are expected to be supported by economics of scale, increase in sales contribution from high margin products and adding non-dairy segment to their product portfolio.
Liquidity indicators witnessed some deterioration lately. Funds from operations (FFO) declined in 9MFY23 mainly on account of lower operating cash before working capital changes and higher finance cost paid. Coverages in terms of FFO to long-term debt and FFO to total debt have declined on a timeline basis in 9MFY23. Similar trend has been witnessed in the case of debt service coverage ratio. While maintaining revenue growth, profitability, and margins is important, improvement in debt service coverage is pivotal for the assigned ratings, going forward.
For further information on this rating announcement, please contact the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (May 2023)

VIS Rating Scale

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