Press Release

VIS Upgrades Entity Rating of Garibsons (Pvt.) Limited

Lahore, March 1, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity rating of Garibsons (Pvt.) Limited (GSPL or “the Company”) from ‘A-’ (Single A Minus) to ‘A’ (Single A) while maintaining short-term rating at ‘A-2’ (A Two). The medium to long-term rating of ‘A’ signifies 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. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on March 14, 2023.
GSPL has been engaged in the business of rice husking, reprocessing, steaming and parboiling. The Company has been involved in exports and local sales of Basmati and Non-Basmati Rice, Rice Bran, Rice Husk, Maize and Sesame Seeds, and has also been engaged in trading business of Lentils, Chickpeas and Solar Panels and manufacturer of Raw and Laminated Chipboard, Medium Density Fibre board and polypropylene bags. The Company has recently ventured into Aqua farming business and also been engaged in the business of mechanized farming, hybrid seeds imports and production. The assigned ratings take GSPL’s market share of exports into account, which has remained around 10% over the last 12 years and may increase slightly in FY24.
Rice is one of the major staple foods and agriculture export of the country. Rice production decreased mainly due to floods affecting overall production levels and adversely affected exports levels in FY23. With better crop projected in FY24 and the decision of a major rice producing country to ban exports of non-basmati rice, exports are expected to increase, going forward. Rice being an internationally traded commodity the assigned ratings incorporate the natural cyclicality in its availability which has a bearing on its business risk.
While sales remained largely muted in FY23, the Company posted increase in profitability despite significantly higher financial charges mainly on the back of higher gross margins. Net profit almost doubled in HY24 mainly on account of significantly higher sales. GSPL has a broad customer base which is present in over 60 countries worldwide. Taking advantage of the favorable international market dynamics and higher product prices, the Company projects higher proportion of export sales during the ongoing year. With increasing trend in FFO, debt coverages improved in HY24 while liquidity profile remained adequate. Equity base enhanced on account of profit retention. The Company has not paid any cash dividend during the last four years. GSPL is supported by directors and family to some extent in liquidity management by providing short term loans. Gearing has remained range bound, though projected to decrease, going forward. The ratings remain dependent on the retention of market share and achievement of the projected financials to maintain margins and liquidity and improve profitability, coverages, and leverage indicators.
For further information on this rating announcement, please contact the undersigned at 042-35723411-13 (Ext: 8008) or email at info@vis.com.pk.





Maimoon Rasheed
Director

Applicable Rating Criteria: Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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