Press Release

VIS Maintains Entity Ratings to Everfresh Farms (Pvt.) Limited

Karachi, Sep 6, 2023: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Everfresh Farms (Pvt.) Limited (EFPL) at ‘BBB+/A-2’ (Triple B Plus/A-Two). The medium to long-term rating of ‘BBB+’ reflects adequate credit quality coupled with reasonable protection factors; risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ indicates good certainty of timely payment supported by sound liquidity and company fundamentals. Outlook on the rating has been revised from ‘Stable’ to ‘Positive’. The previous rating action was announced on July 15, 2022.
EFPL is primarily involved in managing a dairy farm dedicated to the production of milk and agricultural goods. EFPL is affiliated with the Shafi Group of Companies, a conglomerate that operates in various sectors. By end-FY23, the company's livestock count reached a total of 4,068 animals with about equal number of milking and non-milking Holstein cows. The management's objective is to gradually enhance the herd size to 5,500 over the medium-term with natural growth process. Given high cost for imports and significant tax framework, the company has recently relied entirely on in-house breeding initiative. Given higher yields and the expanding herd size, the company enhanced its milk production storage chiller capacity.
Business risk profile of the Company is supported by relatively in-elastic demand of milk. Factors such as urbanization, an untapped market with significant growth prospects, favorable regulatory policies, and a rising middle class contribute to the increasing demand for packaged milk. Enforcing significant regulatory changes, such as implementing minimum pasteurization laws, could potentially address industry challenges more effectively. Rating takes note of the marketing initiatives and their expected positive impact over the medium to long duration. EFPL's exposure to market risk is relatively limited, given its contractual agreements with significant corporate clients.
Net revenue and margins increased in 9MFY23 on the back of heightened volumetric sales along with increase in product price. The sales composition continued to be dominated by milk, contributing over 96% of the total revenue. The company's net profit also stood higher in 9MFY23. Going forward, the management anticipates a gradual rise in profitability driven by economies of scale. However, escalating interest costs might exert pressure on the overall profit levels. Liquidity indicators and coverages have shown some improvement. Gearing has remained manageable while debt leverage improved on a timeline basis by end-9MFY23. Given no major capex going forward, leverage indicators are expected to remain manageable. Maintenance of margins along with gearing and liquidity profile will remain important for ratings review going forward as well as relative positioning of the Company vis - a - vis peers.
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: Industrial Corporates (May 2023)
VIS Rating scale

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