Press Release

VIS Assigns Initial Entity Ratings of Mehran Spice & Food Industries (MSFI)

Karachi, September 04, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial rating of ‘A-/A-2’ (Single A Minus/A-Two) to Mehran Spice & Food Industries (MSFI). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small.

MSFI was established in 1975 and operates as a family-owned partnership concern. MSFI is a leading multi-category food company with its presence both in Pakistan and in the export market. MSFI initially started trading and manufacturing spices products, and over time it has diversified its product folio to recipes, rice, pickles, chutneys and sweet items. The assigned ratings incorporate MSFI’s improving market position and well established distribution network with the company having extensive presence across Pakistan and also in the export market. Ratings also take into account the Company’s low business risk, improving financial profile and room for improvement in corporate governance framework. Ratings remain dependent on continuously strengthening MSFI’s risk absorption capacity, maintaining low leveraged capital structure and undertaking improvements on the corporate governance front.

In Pakistan, spices segment has an estimated turnover of Rs. 36.0b annually. Unbranded spices segment continue to enjoy major share of the market. However, given the increasing focus on health and hygiene, VIS expects share of branded segment to increase gradually over time; although branded segment will have to carefully manage gaps between their prices and those of lower priced private labels. MSFI is a leading player in the spices category while rice segment contributes significantly to Company’s turnover. Furthermore, the company has a strong market position in the deserts and paste segment. In other segments, the company’s market share is on the lower side but is increasing. Ratings also take into account MSFI’s low revenue cyclicality with industry players having limited correlation to weak macroeconomic conditions. Under our base case scenario, VIS expects performance of players in the food and beverage industry to remain resilient despite various challenges arising due to Covid-19.

Ratings also incorporate healthy double digit growth in sales over the last three years which is expected to continue over the rating horizon. Export sales represent the major portion of sales; however local sales growth has outpaced export sales in recent times in percentage terms. Major proportion of export sales have historically been generated from the Middle East market although other markets have continued to contribute to topline. Focus on new product launches along with increasing sales from existing products (from conventional spices segment and from sauces, pickle and vermicelli) would support revenue growth, going forward. Healthy revenue growth along with increasing margins has contributed to continuous improvement in profitability profile. Ratings also take into account healthy liquidity (strong cash flows) and adequate capitalization indicators (low leveraged capital structure).

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext: 306) at (021) 35311861-66 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited