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The Pakistan Credit Rating Agency Limited
Press Release

Date
19-Feb-20

Analyst
Raniya Tanawar
raniya.tanawar@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 Upgrades Entity Ratings of K.K. Rice Mills (Pvt.) Limited.

Rating Type Entity
Current
(19-Feb-20)
Previous
(20-Aug-19)
Action Upgrade Maintain
Long Term BBB BB+
Short Term A2 A3
Outlook Stable Stable
Rating Watch - -

The ratings incorporate K.K Rice Mills' strong presence in the Rice Export Market with a sizable business volume. Though FY19 remained a slow-pace year for the rice industry, rupee devaluation against dollar favored the rice exporters to enhance their revenue base. K.K Rice Mills strategizes on adopting a top-line centric approach mainly targeting the Middle East and African region to explore growth avenues. Competitiveness in the International market in terms of pricing and branding remain a key challenge for the rice exporters, wherein Thailand also emerged as a key player in FY19. The Company's growth centric strategy encompasses maximizing returns through expansion; which comprises addition of a new plant expected to be operational by the end of 1QCY20. The ratings derive comfort from the progress in financial performance as is indicated in better margins trajectory over the periods. Sponsor's invested efforts are reflected in (i) development of a corporate culture through enhanced business practices & (ii) clarity on the succession to the next generations.
The ratings are dependent upon sustained business volumes and growing profitability margins. Meanwhile, upgraded financial practices and enhanced equity base are considered imperative.

About the Entity
K.K Rice Mills (Pvt) Ltd, incorporated on June 2009, is a privately owned family business. The company obtained the exporter’s license in September 2009 from the Rice Exporters Association of Pakistan(REAP). The board of K.K Rice Mills (Pvt) Ltd comprises four members including the CEO of the company. The son of the CEO, Mr. Jatindar Kumar, recently joined the board. The CEO, Mr. Chela Ram, is the man at the last mile holding majority shares in the company. He is an experienced entrepreneur with over 2 decades of experience in the rice business. Mr. Ram has also served as the Vice-Chairman Rice Exporter Association of Pakistan and Chairman of Pakistan Hindu Council. His family has been in the commodity trading for three generations.

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.