Press Release

VIS Assigns Initial Entity Ratings to The Organic Meat Company Limited

Karachi, December 07, 2021: VIS Credit Rating Company Limited has assigned an initial entity ratings of ‘A-/A-2’ (A Minus/ A-Two) to The Organic Meat Company Limited (‘TOMCL’ or ‘the Company’). The medium to long-term rating of ‘A-’ signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

The assigned ratings incorporate TOMCL’s market position & access, given size and capacity and ability to export in 11 jurisdictions. The Company’s business risk profile is supported by the consistent growth in topline and moderately stable gross margins, which have averaged 17% during the past 5-year period (FY17-FY21). The Company’s business model is relatively leaner than peers, with all of the sales being export-oriented and quantum of fixed overheads being low. In addition, the Company exports its product via sea route to gulf countries, which provide an added advantage in terms of freight charges compared to peers that use air cargo facility.

Given strong growth in revenue base, the Company’s cash flow coverage indicators have remained comfortably high during the past 5-year period. In addition, coverage of short term borrowings by stock of inventory and trade debts has been improving and stands comfortably high as at Sep’21. The assigned ratings take into account a conservative capital structure, given a Debt: Equity ratio of 26:74 as of Sep’21. The Company’s gearing and leverage indicators have improved on a timeline and as of Sep’21, stood comfortably low. Ratings also take into account the Corporate Governance framework of the entity, which is reflective of Company’s operational status as a listed entity. Ratings are mainly constrained by business risk of ‘Food & Allied’ segment and client/geographic concentration inherent in TOMCL’s revenue stream.

Incorporated in 2010 and commencing business in 2011, TOMCL specializes as a value-added player in the meat industry having a wide product suite in the meat segment. Over the last decade, TOMCL has emerged as a significant played in this industry, now housing the largest slaughtering capacity in domestic context. The Company is Pakistan’s leading processor and exporter of Red Meat and Edible Offal. The major production facility of TOMCL is located at Gadap Town, Karachi and a separate offal processing facility been established in Korangi Industrial Area, Karachi. The Company was listed on Pakistan Stock Exchange (PSX) in July’2020.

For further information on this rating announcement, please contact the undersigned (Ext: 306) or Arsal Ayub, CFA (Ext: 215) at 021-35311861-71 or fax to 021-35311872-3.






Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria: 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 .