Press Release

VIS assigns Initial Entity Ratings to Garibsons (Pvt.) Ltd.

Karachi, March 11, 2021: VIS Credit Rating Company Ltd. (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A minus/Single A-Two) to Garibsons (Pvt.) Ltd. (GPL). Outlook on the assigned ratings is ‘Positive’. The long term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment, sound liquidity factors supported by good fundamental protection factors and small risk factors.

Incorporated in 1976, GPL is engaged in the business of processing, export of Rice, Rice Bran, Rice Husk, Wheat, Maize and manufacturing of raw and laminated Chipboard and Medium Density Fibreboard (MDF). Although GPL is primarily an export-oriented company as approximately four-fifth of the company’s revenue is generated through exports, the company also has a presence in the local market through its ‘Mughal’ brand. The company’s processing and storage facilities are based in Sindh (Karachi, Gharo, Jacobabad and Golarchi) and Punjab (Sheikhupura, Pindi Das, Layyah and Chaubara). GPL is a family-owned organization with shareholding of the company vested with members of the Garib family, who also participate in the management and supervision of the company’s operations.

The assigned ratings take into account moderate business risk profile of the rice industry given the significant competition and volatility in prices due to demand supply dynamics. However, the growing worldwide population supports the increasing demand of rice in the long run. The ratings derive support from sizeable market of GPL in overall rice exports of Pakistan on a consistent basis. Despite the presence of a large number of players domestically, GPL has commanded a market share (in volumetric terms) of more than 7% in overall Pakistan’s rice exports and more than 9% in non-basmati rice exports over the last ten years.

Assessment of financial risk profile incorporates improving capitalization indicators, and satisfactory liquidity and profitability profile. Net sales of the company have grown at a healthy CAGR of 24.5% in the period from end-FY17 to end-FY20. Growth in topline coupled with improvement in margins has translated to improvement in the profitability profile on a timeline basis. Gross margins of the company are primarily a function of product mix of the company. In FY20, a higher proportion of basmati rice in the overall sales mix contributed to improvement in the company’s overall gross margins. Liquidity profile of the company is considered satisfactory as evident from the sound debt servicing ability. Leverage indicators are on the higher side due to utilization of short term borrowings. Around 90% of the company’s total debt comprises short term borrowing which is acquired for paddy procurement. Stock in trade and trade debts provide adequate coverage for short term borrowings. Despite being on the higher side, the leverage indicators have depicted considerable improvement on a timeline basis due to increase in the equity base. The company has not paid any dividends during the last three financial years. Going forward, capitalization indicators are expected to remain within manageable levels since the company plans to finance capital expenditures primarily through internal generation. The positive outlook assigned to ratings reflects the volumetric growth witnessed in sales coupled with the improvement observed in the profitability metrics and cash flows in HY21. Continuation of similar improvement trend reflects potential for further deleveraging, going forward.

For further information on this rating announcement, please contact Mr. Narendar Shankar Lal (Ext: 203) or the undersigned (Ext: 306) at (021) 35311861-66 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (May 2019)

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