PACRA Maintains Entity Ratings of Awami Agro Commodities
The ratings reflect the proficient background of the partners of Awami Agro Commodities ('Awami'). The partners are well equipped with the related sector knowledge. Growth centric strategy of the partnership encompasses maximizing returns through expansion in export destinations, which is achieved through entering the West African region in FY19. As Awami is a partnership, governance structure reflects needs for improvement. Currently, Awami’s entire export of non-basmati rice vests in African countries. Awami has established two associated companies in Madagascar and Benin which have augmented its revenue growth. The country's rice sector remained well performing in 6MFY20, reflecting on the performance of the rice sector players. The recent outbreak of Covid-19 pandemic across the globe and domestically, is impacting various economic sectors at different levels. This being said, the susceptibility of influence on crop-linked businesses is impliedly low, owing to their inescapable demand at all times and their exceptional treatment under the lockdown situation. Comfort is also drawn from the fact that the Country’s Non-Basmati/Irri Export revenues are largely concentrated in the African Regions, where the pandemic spread is relatively moderate, thus not creating an export hindrance. Additionally, a forecast of decelerated competition on the African side, particularly from Thailand and Vietnam, backs up a stable outlook for Irri/Non-Basmati Export. The same proxy is used to develop a comfort on the business sustainability of Awami, as it deals in Irr/Basmati Rice solely. On the flip side, as crisis in the European countries have heightened, the export demand for Basmati Rice brinks on a blurred outlook and is expected to absorb an impact in the days to come. Historically, Awami's financial risk profile has reflected sanguine debt servicing capacity. Obligations are majorly Short term in nature; Export Refinance Facilities, therefore, cost of borrowings remain modest. Amidst the current challenging environment, SBP's Relief Packages to Exporters availing Refinancing Facilities would come handy to the rice players as well.
The ratings are dependent upon sustenance of business volumes under the current challenging environment. As global economy undergoes distress, business sustainability emerges as the key challenge for the Exporters. Meanwhile, keeping up with a stable financial risk profile is imperative.
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.