PACRA Assigns Initial Entity Ratings to Kangore Traders

The ratings reflect Kangore’s relative position in the country's rice export market. The sponsor is associated with the related business for long. Attributed to the commodity nature of 'non-basmati rice', business risk is low. Additionally, rupee devaluation is a benefit to the export industry as a whole. The key challenge, however, remains in the cyclical nature of the rice business. Kangore Traders bears the status of a sole proprietorship with the single owner being the man of the last mile. Corporate structure lacks on basic grounds. The same is depicted by the small size of the proprietorship. Given the industry dynamics, Company has maintained its profitability over the years. Management systems and controls also display a weak outlook, strictly necessitating the need for strengthening controls over financial reporting. Kangore's financial risk profile is reflected by a bottomline centric approach with a moderately leveraged capital structure; debt book majorly constitutes export related short term funding needs. With major focus of business towards African markets, working capital cycles have enlarged gradually, creating need for short term borrowing over a relatively longer horizon.
The ratings are dependent upon strengthening of corporate discipline, including enhancement of controls over financial reporting. Meanwhile, consistent profitability alongside growth in the business volumes is essential.

About the Entity
Kangore Traders is a sole proprietorship established in 1996, 100% owned by an individual named Mr. Nawal. The Chairman and Chief Executive, Mr. Nawal is a graduate from Sindh University. Kangore’s core business involves processing and trading of rice locally and internationally. Kangore Traders also has its own storage area of approx. 4 acres. It has five processing units, with a total capacity of 40 M.Tons per hour, located in Landhi, Karachi.