Press Release

VIS Assigns Initial Entity Ratings to Mehran Spice & Food Industries (MSFI)

Karachi, December 14, 2021: VIS Credit Rating Company Limited (VIS) has assigned initial rating of ‘A-/A-2’ (Single A Minus/A-Two) to Mehran Spice & Food Industries (MSFI). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small.

MSFI was established in 1975 and operates as a family-owned partnership concern. MSFI is a leading multi-category food company with its presence both in Pakistan and in the export market. MSFI initially started trading and manufacturing spices products, and over time it has diversified its product folio to recipes, rice, pickles, chutneys and sweet items.

Assigned ratings incorporate MSFI’s improving market position and well established distribution network having extensive presence across Pakistan and also in the export market. Ratings also take into account the Company’s low business risk, improving financial profile and room for improvement in corporate governance framework.

In Pakistan, unbranded spices segment continue to enjoy major share of the market. However, given the increasing focus on health and hygiene, share of branded segment is expected to increase gradually over time. MSFI is one of the leading players in the branded spices category followed by rice exports sales. Furthermore, in other segments, company’s market share is also increasing over time. Ratings also take into account low cyclicality of the industry which supports the business risk profile of the company.

Ratings also incorporate adequate growth in sales over the last three years which together with increasing margins has contributed towards healthy profitability. Revenue growth is expected to continue over the rating horizon. Majority of the sales are export based which will remain the focus of growth, going forward. Geographic concentration in exports sales is on the higher side however, management has recently tapped new markets in an attempt to diversify. Ratings also take into account healthy liquidity profile as evident by strong cash flow coverages against outstanding obligations and low leveraged capital structure. Going forward, sustainable growth in revenues, strengthening of equity base while maintaining low leveraged capital structure will be important for ratings.

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

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