Press Release

VIS Reaffirms Entity Ratings of Staple Foods (Pvt.) Limited

Karachi, March 13, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Staple Foods (Pvt.) Limited (SFPL) at ‘A-/A-2’ (Single A Minus/Single A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on January 10, 2022.

SFPL is engaged in the business of processing and sale of Basmati and IRRI rice in international and local markets, with exports constituting more than 90% of the revenue stream on a timeline basis. The Company was incorporated in 2000 as a family-owned business. The Company’s processing and storage facilities are based in Port Qasim, Karachi, Sindh.

The assigned ratings derive support from Company’s established position in brown basmati rice export market, which contributes nearly 40% to its export sales. Ratings also take into account well-established relationships with clients and fairly diversified region-wise exports sales. During the outgoing year, growth in topline was led by higher average prices despite subdued volumetric sales. Gross margins have also improved primarily due to favorable selling prices backed by overall competitiveness of rice exporters amid depreciating local currency. The liquidity profile is underpinned by adequate cash flow coverages in relation to outstanding obligations and working capital management. The 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. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at info@vis.com.pk

Sara Ahmed
Director

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .