PACRA Maintains the Entity Ratings of VMS Trading Company

VMS Trading Company ("VMS" or "the Company") operates in Pakistan's rice processing and trading sector, with a notable presence in the rice export market. The Company has an integrated production setup, managing the procurement of raw rice to processing and delivery of finished products. While IRRI-6 rice is the primary revenue driver, VMS also processes and trades in IRRI-9. The Company caters to a diverse customer base, offering varying specifications related to rice whitening, mixing proportions, polishing levels, and other requirements. Rice remains one of the major staple foods and cash crops in Pakistan. Punjab accounts for ~52% of Pakistan's rice production, while Sindh contributes ~38%, and the remaining 8% from Balochistan. Pakistan ranks among the top 10 in global rice production. During FY26, rice cultivated area remained broadly stable at approximately 3.5 million hectares, with production largely unchanged at ~9.4 million MT (FY25: ~9.5 million MT). However, the sector faced pronounced headwinds on the export front. During 9MFY26, total rice export volumes declined to ~3.24 million MT, reflecting a YoY contraction of ~25% against FY25's ~5.80 million MT. Basmati exports stood at ~558K MT, down ~6% YoY (FY25: ~797K MT). Pakistan's export mix remains structurally concentrated in coarse/non-basmati varieties (~86% volume share), leaving the sector disproportionately exposed to international price volatility. India's re-entry into global rice markets following the removal of export restrictions intensified competitive pressure, particularly within non-basmati segments. Compounding these dynamics, the temporary closure of the Pak-Afghan border and shipping disruptions along key Middle Eastern trade routes further constrained export realizations and volumes across the sector. The limited penetration of value-added rice products continues to amplify vulnerability to external pricing pressures. In line with broader industry trends, VMS experienced pressure on export volumes during 9MFY26, which adversely affected overall financial performance. This follows a period of meaningful revenue growth, with the Company recording revenues of ~PKR 13,118mln in FY25 (FY24: ~PKR 9,339mln; FY23: ~PKR 6,137mln), supported by better export volumes and favorable pricing conditions. The ongoing export demand compression has necessitated a strategic pivot, with management actively pursuing higher domestic sales to partially offset the shortfall. VMS's revenue mix, historically skewed ~74% toward exports, renders the Company's topline susceptible to the current export market dislocation. The Company's financial risk profile continues to reflect adequate coverages, cashflows, and working capital cycle, supported by short-term concessionary borrowings. Nonetheless, VMS remains a sole proprietorship, requiring notable improvements in legal and governance structure. Going forward, VMS is envisaged to materialize its strategies through (a) tapping new export markets, (b) better pricing models, and (c) effective working capital management.
The ratings are dependent on the rationalization of the management's strategies to sustain a position in the global market under a challenging business environment, with sustainability and predictability in volumes, sales and margins. With growth in the firm's business a prudent financial discipline and implementation of a stringent control environment shall remain imperative.

About the Entity
VMS Trading Company, established in 2010 as a sole proprietorship, is engaged in the processing, trading, and export of rice. The Business operates a processing facility at Port Qasim. Ownership resides with the Chief Executive Officer, Mr. Kheem Chand, who is supported by a seasoned management team.