Press Release

VIS assigns Initial Entity Ratings to Staple Foods (Private) Limited

Karachi, January 10, 2022: VIS Credit Rating Company Ltd. (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A minus/Single A-Two) to Staple Foods (Private.) Limited (SFPL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markers is good. Risk factors are small.

Incorporated in 2000, SFPL is engaged in the business of processing and sale of Irri and Basmati rice. A family owned Company, SFPL is primarily an export-oriented company with more than four-fifth of the company’s revenue export based. The Company also has a presence in the local market. The company’s processing and storage facilities are based in Port Qasim, Karachi, Sindh.

The assigned ratings take into account moderate business risk profile of the rice industry given the significant competition and volatility in prices due to demand supply dynamics, however growing worldwide population supports the increasing demand of rice in the long run. The ratings derive support from its established position in the Basmati brown rice segment, higher margins and sound financial performance on a timeline basis. Ratings further draw comfort from long-term well established relationships with clients and fairly diversified exports region wise.

Assessment of financial risk profile incorporates strong capitalization and liquidity indicators. Over the years, growth in topline, low gearing structure coupled with stable margins has translated into improvement in the profitability profile on a timeline basis. However, margins and profitability took a hit in FY21 on account of sizeable increase in freight charges globally. The Company has made changes in sales terms and business processes to mitigate the impact, which is reflective in recovery witnessed during Q1’FY22. Ratings also incorporate strong capitalization indicators reflective of Company’s conservative financial policy. Corporate governance structure provides room for improvement. Going forward, achieving sustained profitability and maintaining sound capitalization indicators will be important for ratings.


For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext: 204) at (021) 35311861-66 or email at info@vis.com.pk.







Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: 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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .