Press Release

VIS Assigns Initial Ratings to Everfresh Farms (Pvt.) Limited

Karachi, July 15, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Everfresh Farms (Pvt.) Limited (EFPL). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

Incorporated as a Private Limited Company, EFPL commenced its dairy farming operations in 2008. The principal business activity of the company entails running a dairy farm for the production of milk and agricultural products. The company belongs to Shafi Group of Companies, which has presence in the textile (Shafi Texcel Limited-STL), food (Everfresh Farms-EFPL, Shafi Foods- SFPL, Shafi Gluco Chem Private Limited), Leather (Shafi Tanneries Private Limited), and footwear sectors. Product portfolio of the company largely comprises raw milk with meager proportion of imported cheese, vegetables, frozen fries and seeds & food grains.

Business risk profile of the company is supported by in-elastic demand of milk. Loose milk constitutes around 91% of the overall market while penetration of processed milk is only 9%. Business risk for EFPL is comparatively on the lower side given contractual orders locked with major customer-Nestle contributing around 95% of sales.

Assessment of financial risk profile reflects improving profitability, liquidity and leverage indicators. Revenue of the company increased by 47% in FY21 due to higher volumetric sales underpinned by growing milking herd size. Going forward, revenue is projected to increase mainly due to volumetric growth of milk and higher price renewal of raw milk in Nestlé’s agreement. Gross Margins have depicted improvement on the back of organic growth in herd size yielding economies of scale along with revision in rates with major buyer. Projected backward integration in mechanized farming for livestock feed is expected to yield benefits in margins. In line with higher profit levels, liquidity profile has witnessed improvement and is considered adequate with cash flows providing sufficient coverages against outstanding obligations. Moreover, leverage indicators have depicted improvement on a timeline basis on account of profit retention and interest-free loan from associates; however the same are expected to increase going forward to finance expansion in herd size, purchase land for the cropping division, and to fund BMR and working capital requirements. Maintaining the same within manageable levels for the assigned ratings is considered important.

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

Sara Ahmed

VIS Entity Rating Criteria: Corporates (August 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 .