Press Release

VIS Reaffirms Entity Ratings of Garibsons (Pvt.) Ltd. (GSPL)

March 14, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings assigned to Garibsons (Pvt.) Ltd. (GSPL) 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’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are sound. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on February23, 2022.

The company purchases paddy directly from farmers when the new crop arrives. First processing is done at the husking plants of the company and subsequently the de-husked rice is re-processed in the company’s mills in line with the buyer’s requirements. Rice is one of the major staple foods in Pakistan and in FY22, rice production has increased by 10.9% and contribution towards GDP is 0.7% (FY21: 0.6%). The assigned rating takes into account GSPL’s market share of exports into account, which has remained around 10% over the last 4 years and the market share has increased slightly to 10.7% in FY22.

Net sales for FY22 were reported considerably higher vis-à-vis FY21. This was due to volumetric increase of rice sales along with higher selling price. GSPL has a broad customer base which comprises over 60 countries worldwide. The top 10 customer-wise concentration in sales increased during FY22. However, GSPL has exhibited long-term association with these customers. The improvement in gross margins in FY22 and HY23 was mainly attributed to better average selling prices and inventory gains
In line with improvement in profitability levels in absolute terms, liquidity profile of the company has improved during FY22 with adequate coverage of cash flows in relation to outstanding obligations and sound debt servicing ability. However, there is an increasing trend in cash conversion cycle of the company. The projected cash cycle also stands high which would require higher working capital with increasing interest rates that may impart pressure on profitability and liquidity. Equity base was reported higher on the back of profit retention. The company has not paid any dividend during the last three financial years. GSPL is supported by directors and family to some extent in liquidity management by providing short term loans. The ratings remain dependent on the retention of market share, management of capitalization and liquidity indicators at levels commensurate with the assigned ratings and continued financial support by sponsors in retaining capitalization levels.

For further information on this rating announcement, please contact Mr. Hasan Rashid at 042-35723411-13 and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Javed Callea

VIS Entity Rating Criteria: Corporates (August 2021)

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