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
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