The JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial medium to long-term and short-term entity ratings of A (Single A) and A1 (A One) to English Biscuit Manufacturers (Pvt) Limited (EBM). The outlook on the medium to long-term rating is 'Stable'.
The EBM is one of the two leading biscuit manufacturing companies in Pakistan and together with its wholly-owned subsidiary, Coronet Foods (Pvt) Ltd, markets the Peek Freans brand which enjoys nation-wide popularity.
It operates on very low level of debt leverage in line with the sponsors' conservative strategy and supported by healthy growth in equity over the years from consistent profitability.
The liquidity position is strong with low debt servicing and working capital requirements.
The industry is faced with stagnant price levels for biscuits in the last five years as the demand is discretionary and highly price elastic.
Thus gross margins come under pressure from adverse fluctuations in the raw material prices which cannot be passed on to the consumers and hence, impact the bottom line profitability of the company.
The EBM management's strategy for achieving growth for improved profitability in the past has focused on increasing sales volume achieved through consistent expenditure on improvement and expansion of the production capacity.
Currently, the company is also carrying out expansion of its production facility, and this strategy for growth will continue in future backed by pro-active marketing efforts to generate substantial increase in sales and profitability.
The EBM management is also focusing on improving the information technology systems for greater controls and improved information flow to assist decision-making process.