The Pakistan Credit Rating Agency Limited
13-Nov-19
Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-19
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-19
- Criteria | Rating Modifier | Jun-19
Related Research
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PACRA Maintains Entity Ratings of Reliance International Commodities Export
| Rating Type | Entity | |
|
Current (13-Nov-19 ) |
Previous (20-Aug-19 ) |
|
| Action | Maintain | Maintain |
| Long Term | BB | BB |
| Short Term | B | B |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect the emergence of the Reliance International Commodity Exports (''Reliance'') as a growing IRRI rice exporter. In line with the overall industry changing the trend, Reliance has shifted its export sales mix from China to African countries in the recent past. This has not only reaped better top-line growth but enlarged its cash conversion cycle. The company is committed to increasing its foreign footing as it has marked its presence in African regions through two distribution entities. Presence in the local market remains indifferent. The corporate structure of the company is limited as the business is a sole proprietorship. The global trade market is gradually being dominated by Thai rice exports, posing tough competition for the regional players. Pakistan exports relatively small volume, which shows a reduction, now recently has improved capacity in basmati. The company's topline witnessed a slight increase which also translated into profit margins. Reliance's debt book solely comprises Export Refinancing Facility availed to fund its working capital needs. During FY19, rice crop area stood at 2.8 million hectares. The production stood at 7.2 million tonnes as against 7.5 million tonnes last year, short by ~3.3%. Pakistan exported ~4 million metric tons of rice, almost the same as FY18, though the amount in rupee terms was significantly high due to currency depreciation against USD.
The ratings are dependent on Reliance's ability to sustain business profile and yield better profit margins. Meanwhile, prudent working capital management is imperative.
About
the Entity
Reliance International Commodity Exports is a sole proprietorship. Reliance is involved in rice export business. It is wholly owned and managed by Mr. Arif Hussain. Mr. Arif Hussain is a seasoned professional with experience of more than two decades. Mr. Arif remained president of Sindh & Baluchistan Rice Millers Association for the tenure of 2007-2010 and 2010-2013. M/s Sajid & Co is the external auditor of the Reliance.