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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-18

Analyst
Muhammad Nadeem Sheikh
nadeem.sheikh@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Awami Agro Commodities

Rating Type Entity
Current
(27-Dec-18)
Previous
(12-Jun-18)
Action Maintain Initial
Long Term BB+ BB+
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

The ratings reflect the strong experienced background of the partners. The partners of the business are well equipped with the related sector knowledge. The strategy of the partnership encompasses maximizing the returns through gaining new markets. Currently, Awami Agro is exporting non-basmati rice mainly to African countries. Turnover of the partnership had shown good growth in past couple of years with consistent generation of healthy margins. As Awami Agro is a partnership, governance structure reflects needs for improvement. Financial risk profile is driven by a bottom line centric approach with a good debt servicing capacity and a leverage capital structure. Debt profile entirely constitutes short term borrowings to manage working capital needs.
The ratings are dependent upon sustenance of margins and increase in revenue. Lack of proper board structure is a concern. Sustainable profits, adequate cash flows and working capital cycle are majorly backed by reasonable turnover.

About the Entity
Awami Agro Commodities, established in 2012 by two brothers; Mr. Bhagwan Das and Mr. Sanjesh Kumar, a Partnership, family owned business. Awami Agro Commodities is one of the sustainable companies of rice exports. The business holds membership of Rice Export Association (REAP) and Karachi Chamber of Commerce & Industry (KCCI).

Mr. Bhagwan Das and Mr. Sanjesh Kumar, 50% holding each, are the men behind the name Awami Agro Commodities. Mr. Bhagwan Das has three brothers: Sanjesh Kumar, Naresh Kumar and Govinda Kumar, all associated with Awami Agro. The entire family is in rice industry for past three decades and Mr Vishnu Mal, father of Mr. Bhagwan Das, also owns a company in interior Sindh; Awami Rice Mills.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.