Press Release

VIS Upgrades Entity Ratings of Agro Processors and Atmospheric Gases Limited

Karachi, September 11, 2024: VIS Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of Agro Processors and Atmospheric Gases Limited to ‘BBB+/A-2’ (Triple B Plus / A-Two) from ‘BBB/A-2’ (Triple B / A-Two) The medium to long term rating of ‘BBB+’ signifies adequate credit quality. Protection factors are reasonable and sufficient while risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. The outlook on the rating is ‘Stable’. Previous rating action was announced on Aug 23, 2023.

Established in 1980, Agro Processors & Atmospheric Gases Limited (APAG or 'the Company') operates in both B2B and B2C markets and is primarily engaged in the manufacture and sale of edible oil, banaspati, and related products. APAG’s product lines include palm oil, separated olein and super olein from palm oil, olive oil, vanaspati, margarine, and sauces. The Company's brand portfolio includes Soya Supreme, Malta, Champion, Taqat, and Smart.

Revision in entity ratings takes into account overall improvement in the financial risk profile of the Company despite challenging macroeconomic environment. Assigned ratings capture notable improvement in capitalization profile with gearing and leverage decreasing on the back of higher profitability and better working capital management with comfortable debt servicing level, strong brand presence and consistent improvement in gross margins. Ratings also incorporate business risk profile of the edible oil industry characterized by sensitivity of profit margins to fluctuations in foreign exchange rates and international commodity prices. The topline recorded growth in FY23 which was driven primarily by rising prices, despite volume decline. In FY24 volumes have stabilized however due to price decline, revenue have been impacted. Gross margins also depict an inclining trend mainly due to product mix optimization. Nevertheless, net margins remain under pressure due to inflationary cost impact, consequently affecting profitability. The liquidity metrics remain adequate, albeit increase in receivable cycle has been noted. Improvement in the same will remain important for the ratings going forward.

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

Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .