Press Release

VIS Reaffirms Entity Ratings of Dairyland (Pvt) Limited

Karachi, January 17, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Dairyland (Pvt) Limited (‘Dairyland’ or ‘the Company’) at ‘A-/A2’ (Single A Minus/A Two). Medium to long-term rating of ‘A-’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Positive’. Previous rating action was announced on November 17, 2023.

Dairyland, established in 2009, is engaged in the manufacturing and distribution of dairy products, with a significant emphasis on processed milk. The Company operates within the Akhtar Group of Companies, with majority shares (49%) held by Akhtar Textile (Pvt.) Limited. The Company's facilities are situated at Gharo, District Thatta and Karachi.

The packaged milk industry in Pakistan faces fierce competition despite capturing only around 10% of the total milk market. This limited penetration stems from consumer preference for traditional loose milk, regulatory slackness and the sector's limited expansion over time. Though the untapped loose milk market represents significant growth opportunity for the packaged milk industry players, however, industry risk is rising amid imposition of taxes and duties, and exacerbating inflationary pressure that negatively impacted demand.

The Company demonstrated healthy growth in production across both liquid and non-liquid product lines in FY24, facilitated by Dairyland's ability to meet evolving market demand by expanding the milking herd size. Moreover, the Company has plans to enhance its export sales in the coming years and increase its presence in the domestic market. Net sales have increased on a timeline basis due to favorable pricing and higher sales volume. However, overall profitability deteriorated in FY24 due to escalating input costs and higher financial charges. The ratings outlook remains positive, given the strengthening in debt servicing in the outgoing year.

However, upgrade in ratings is sensitive to return of profit margins to historical levels, continued enhancement in debt servicing metrics, improvement of adequate liquidity profile and preserving conservative capital structure in the ongoing year.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk



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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