Press Release

VIS Assigns Initial Ratings to Gujranwala Food Industries (Pvt.) Limited

Karachi, January 10, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB/A-2’ (Triple B/A-Two) to Gujranwala Food Industries (Pvt.) Limited (GFIL). 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. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

The assigned ratings take into account GFIL’s presence in fast-moving consumer goods industry whereby economic downturn and inflationary pressure has limited impact on the overall operational performance. The company is a mid-tier player in the oligopolistic confectionery industry with reasonable market share. The business risk profile is considered moderate on account of established market presence in relatively low-priced products and increasing diversification into export markets. The sales increased considerably during FY21, driven largely by increased penetration in the U.S., the U.K., and Middle East markets, while revenue from the local market remained stable. Going forward, the company plans to continue its focus on export markets while tapping new jurisdictions.

The company operates on largely stable gross margins; however, the same does not fully translate into the bottom-line owing to relatively high operating costs. Liquidity profile is supported by funds from operations which provides adequate coverage against the financial obligations of the company. Comfort is drawn from inventory-plus-receivables to short-term borrowings ratio which, despite some decrease, continues to remain on a higher side. The capital structure of the company remains conservative with minimal reliance on borrowings. The ratings are constrained by the company’s limited scale of operations, high operating expenses putting a drag on profitability and liquidity indicators, and modest equity base.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at021-35311861-70 (Ext: 201) or email at info@vis.com.pk





Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

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