JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long-term entity rating of 'A+' (Single A Plus) with 'Stable' outlook, and short-term entity rating of 'A 1' (A One) of English Biscuit Manufacturers (Pvt) Ltd (EBM).
JCR-VIS has also re-affirmed the medium to long-term ratings of EBM's wholly owned subsidiary, Coronet Foods (Pvt) Ltd (CFL), of 'A+' (Single A Plus) with 'Stable' outlook and the short-term rating of 'A 1' (A One).
The ratings reflect the companies' low level of debt leverage maintained historically arising from the conservative financial strategy of the sponsors and efficient growth in operations over the last few years allowing them to re-establish Peek Freans as the market leader in the biscuit industry in Pakistan.
The companies have focused on ensuring quality, introducing new biscuits based on advanced technology and increasing capacity while maintaining price levels in order to effectively compete in a highly price sensitive market.
This has enabled them to penetrate the market and achieve sales growth by narrowing the pricing gap with the unbranded biscuits. CFL also provides interim financial support to EBM from excess liquidity when required to finance its expansion plans.
The management of the companies expect that the success in introduction of new biscuit varieties and capacity expansion will mitigate product concentration risk in revenues going forward.
As private limited companies, the access to the capital markets is limited. However, the management is of the opinion that internally generated cash flows would be sufficient to meet their growth needs in the foreseeable future.