Press Release

VIS Reaffirms Entity Ratings of Dairyland (Private) Limited

Karachi, February 19, 2021: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings to Dairyland (Private) Limited (DPL) at ‘A-/A-2’ (Single A Minus/A - Two). The long-term rating of ‘A-’ signifies good credit quality and adequate protection factors. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 15, 2019.

DPL deals in the production and sales of dairy and poultry products, especially processed milk and eggs. The company is a part of Akhtar Group of Companies with majority shareholding vested with Akhtar Textile (Pvt.) Limited. The company has developed an end-to-end value chain ranging from its own farm containing livestock for milk production to the final packaged products for the end-consumer. DPL deals under the brand name of ‘Dayfresh’ with a product portfolio encompassing Homogenized & Pasteurized milk, UHT Milk, Flavored Milk, Tea Whitener, and Yogurt, Raita, Cheese and eggs.

The assigned ratings of the company draw comfort from the interest free loan injected by the sponsors, which is convertible into ordinary shares of the company at the discretion of the management. Ratings also incorporate relatively stable demand, improving profitability profile and increasing market penetration of the company on a timeline basis. Despite challenges faced due to the global pandemic disrupting supply chain operations whereby B2B segment and exports were hampered, DPL was still able to register growth in revenue since it is engaged in the supply of essential products.

The company is at a relatively nascent stage of operations in comparison to peers as indicated by its low market share. Sales revenue of DPL has depicted double-digit growth during FY20 on account of both price and volumetric increase along with geographical diversification and addition of new products in the product portfolio. Going forward, management plans to focus on premium products that contribute higher value, consequently projecting growth in sales revenue. Liquidity profile of the company has improved during FY20 with adequate coverage of cash flows in relation to outstanding obligations, manageable ageing of trade debts and sound debt servicing ability. Going forward, with projected growth in profitability of the company and planned cash flow management, liquidity indicators are also expected to improve. The capitalization indicators have depicted a slight increase during FY20 primarily on account of capex requirement and working capital needs; however the same are expected to remain within manageable levels due to projected growth in profitability and sponsor support. Maintenance of financial indicators going forward is considered important from a ratings perspective.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.





Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .