PACRA maintains Entity Ratings of Asif Rice Mills

The ratings indicate Asif Rice Mills’ (the Business) prominent position in Pakistan’s export segment. Founded as a sole proprietorship, the Business specializes in the processing of semi-processed non-basmati rice. The Business has established its presence in China, Far East Asia, Europe, and Africa regions through strategic partnerships and is committed to expanding its international footprint. Asif Rice Mill’s strategic diversification into the food colors segment enhanced its product portfolio and contributed positively to the company’s performance. Under the astute leadership of Mr. Asif Ali, the sole proprietor, Asif Rice Mills leverages a well-equipped operational infrastructure to navigate the global rice export market successfully. Asif Rice Mills demonstrated strong top-line expansion, with revenue increasing by ~175% in FY24, reflecting the company’s growing operational scale. However, this growth was offset by margin compression, as gross profit margins declined by ~36%, primarily driven by elevated raw material costs. Furthermore, net profitability weakened due to higher finance costs, indicating increased pressure on the company’s bottom line. The Business reduced its borrowings, leading to an improvement in its leverage profile. The company's financial risk profile is underpinned by a well-capitalized structure, efficient working capital management, and healthy debt service coverage indicators. The sponsor’s support is crucial for the ratings. The rice sector, a significant contributor to Pakistan's agricultural economy, representing ~3.5% of agricultural value addition and ~0.7% of the nation's Gross Domestic Product (GDP), experienced a substantial surge in production during FY24. This surge, coupled with heightened global demand and a temporary export ban imposed by India, propelled a remarkable ~35% increase in rice production. Consequently, basmati rice exports experienced a significant boost, soaring from $650mln to $876mln in FY24. Furthermore, exports of non-basmati rice witnessed a substantial surge, increasing from $1,498mln to $3,054mln during the same period.
The ratings are dependent upon sustenance of business volumes under the current challenges in the local economy. As global economy undergoes distress, business sustainability emerges as the key challenge for the exporters. Meanwhile, keeping up with a stable financial risk profile, particularly debt servicing capacity, remains imperative for ratings.

About the Entity
Asif Rice Mills (‘Asif Rice’ or ‘the Business’) was incorporated in 2006 as an Association of Persons (AoP). Major ownership of the Business resides with the sons of Mr. Mumtaz Ali. Mr. Asif Ali Shaikh holds ~34% shareholding, while Mr. Hanif Shaikh and Mr. Kashif Mumtaz hold ~33% each. Asif Rice is primarily engaged in processing semi-processed variants of non-basmati rice and limited quantities of basmati rice and exporting it to China, Far-east Asia, Europe, and Africa. The Business has a processing capacity of 90MT per hour, currently. Mr. Asif Ali Shaikh is the CEO, while the other sponsoring individuals Mr. Kashif Mumtaz and Mr. Hanif Shaikh serve as Directors of Sales and Procurement respectively.