VIS reaffirms ratings of Shakarganj Food Products Limited

KARACHI: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Shakarganj Food Products Limited (SFPL) at single A-Minus/A-Two.

The medium to long-term rating of "A-" denotes good credit quality coupled with adequate protection factors. Moreover, 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 considered sound, said a press release on Friday.

Rating of SFPL secured Sukuk issue of Rs 725 million has also been finalized and reaffirmed at single A. Outlook on the assigned ratings is stable. Previous rating action was announced on March 20, 2018.

The assigned ratings take into account strong sponsor profile of the company, comprising renowned business concerns including Sharkarganj Limited, Bank-Islami Pakistan Limited and Crescent Steel and Allied Products Limited.

The business risk profile of the company is considered moderate on account of increasing intensity of competition in value-added dairy and challenging operating environment of the organized dairy segment, leading to range bound margins.

Moreover, the industry margins remain sensitive to exchange rate risk and regulatory changes in taxes and duties on import of skimmed milk powder and edible oils.

The ratings draw comfort from sustained business growth, adequate liquidity profile and debt coverages.