Press Release

JCR-VIS Assigns Entity Ratings to Haleeb Foods Limited

Karachi, October 31, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned an initial entity rating of ‘A/A-2 (Single A /A-Two) to Haleeb Foods Limited (HFL). Outlook on the assigned ratings is ‘Stable’.

The ratings assigned to HFL take into account moderate business risk profile; the company has been able to sustain healthy gross margins despite increasing competitive operating environment on the back of established market niche of its end products. The ratings also incorporate sound financial risk appetite emanating from its low leveraged capital structure and adequate debt service coverage. The company’s reasonably strong sponsor profile is also a key rating factor. The company has high concentration in tea whiteners and creamers with limited market share in UHT packaged milk segment. HFL is a subsidiary of VMFG (Pvt.) Limited while residual ownership resides with Chaudhry Ilyas family.
Sales have witnessed a decline in FY16 and 9MFY17 on account of market competitiveness, prompting product price reduction. The company however has been able to sustain healthy margins on the back of competitive procurement of major raw materials. Profits have decreased in comparison to last years. The management expects growth in packed milk sales given price reduction vis-à-vis peers.
Total equity of the company increased on account of internal capital generation. During FY16, the company managed to retire its long term loan and do not plan to raise long term borrowings in the near future. As per projections, overall capital structure of HFL is expected to improve further.
Overall, the company has strong liquidity profile with healthy current ratio. Funds from Operations (FFO) remain sufficient on a timeline basis.
Senior management team of the company comprises experienced professionals. New management and board members were introduced after takeover by VMFG. The appointment of top tier audit firm is a positive feature in governance and control infrastructure.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Maimoon Rasheed at 042-35723411-13

Jamal Abbas Zaidi

Applicable Rating Criteria: Industrial Corporates (May 2016)

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 2017 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited