PACRA Maintains Entity Ratings of 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 agricultural nature of its product - non-basmati rice, business risk is low, yet bears a cyclicality. Over the years, Kangore has emerged as one of the prominent rice exporters of the country, therefore, strength is derived from its strong and growing topline. During FY19, the country’s rice industry observed a subtle growth, whereas rupee devaluation favored the rice exporters to enhance their revenue base, including Kangore. Profitability margins, however, dwindled on the backdrop of higher operating costs, particularly risen selling expenses. Kangore bears the status of a sole proprietorship with a single owner being the man of the last mile therefore, the corporate structure is limited and lacks on basic grounds. Financial risk profile is reflected by a topline 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 sustained business growth and profitability margins. Meanwhile, improved governance practices, including financial veracity, remain imperative to the ratings.

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.