The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Usman

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PACRA Maintains Entity Ratings of K.K. Rice Mills (Pvt.) Limited

Rating Type Entity
Action Maintain Upgrade
Long Term BB+ BB+
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

The ratings capture the fresh injection of PKR ~ 175mln in the company as subordinated loan. The sponsors have expressed undertaking to keep the amount as such or convert it into paid-up capital. The ratings incorporate the improving market positioning of the company, also reflected from the recently reported numbers. In line with the industry, KK Rice Mills also benefited from the improved performance of the country’s rice segment attributed by the ban of Indian Rice that eventually helped rice players improve their margins. KK Rice Mills has adopted a top-line centric approach targeting the Middle East and the African region. The company is going through business expansion and the management expects to generate the maximum fruit of the expansion. Henceforth, another expansion comes into play as Company’s new plant is expected to be operational by March’19. Timely promotion of the product at the right price is essential. Compared to establish corporate, the board oversight and control environment are desirous of further improvement. 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%. During FY19, Pakistan exported a total of 4.097 million metric tons of rice compared to some 4.082 million metric tons in the corresponding period of FY18.
The ratings are dependent upon the maintained business volume and profitability. Adherence to sound financial discipline while debt servicing capacity through cash position is vital for the ratings.

About the Entity
KK 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 KK Rice Mills (Pvt) Ltd comprises of four members including the CEO of the company. The son of the CEO, Mr. Jatindar Kumar, recently joined the board. The CEO of the company, 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.