Press Release

JCR-VIS Reaffirms Entity Ratings of Matco Rice Processing (Pvt.) Limited at A-/A-2

Karachi, November 29, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Matco Rice Processing (Pvt.) Limited (Matco) at ‘A-/A-2’ (Single A-Minus/ A-Two). Outlook on the assigned rating is ‘Stable’.

The rating incorporates MATCO’s position as one of the leading rice exporters in the country. International Finance Corporation (IFC) acquired a stake in the company in FY12 while majority shares are held by the Ghori family. In recent years, rice exports have remained highly competitive amidst availability of subsidized Indian rice in international markets making it relatively difficult for Pakistani exporters to retain market share. MATCO was able to contain the decline in its exports as compared to peers.

In the absence of growth in Basmati segment, the company focused on IRRI market that is generally categorized with lower margins. The phenomenon not only diluted the bottom line of the company but also affected cash generation vis-à-vis total outstanding debt. With borrowings primarily short term in nature and the company carrying a sizeable amount of inventory/receivables, its ability to retire debt in a timely manner is considered adequate. However, future trend in this respect may need to be closely tracked. There are no major CAPEX requirements in coming years and it is expected that the debt profile will remain within manageable limits.

MATCO has enhanced marketing efforts to entrench its flagship brand ‘Falak’ in local and international markets. The company has also incorporated a subsidiary at Sharjah Airport International Free Zone (SAIF) which will serve as a trading vehicle primarily for basmati rice at best available prices from Asian sellers for exports to mainly Middle East and African markets. Given the marketing efforts underway, the company is projecting improvement in margins and overall profitability, going forward.

In line with IFC’s recommendations upon equity injection, the company is making concentrated efforts to improve its corporate governance framework. This initiative would assist in the company’s transition to a public listed entity in the future.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 510) at 021-35311861-70 or fax to 021-35311873.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2013 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited