Karachi: VIS Credit Rating Company Limited has upgraded the entity ratings of Agro Processors and Atmospheric Gases Limited from ‘BBB/A-2’ to ‘BBB+/A-2’, reflecting an enhanced financial risk profile and strong market presence in the edible oil sector.

According to VIS Credit Rating Company Limited, the upgrade is based on an overall improvement in the company’s financial risk profile despite a challenging macroeconomic environment. The new ratings, announced following the last review on August 23, 2023, underscore a notable improvement in the capitalization profile, reduced gearing and leverage, and better working capital management. These factors contribute to the company’s adequate credit quality, with reasonable protection factors and good short-term liquidity, ensuring timely repayment of short-term obligations.

Established in 1980, Agro Processors and Atmospheric Gases Limited (APAG) manufactures and sells a diverse range of edible oils and related products in both B2B and B2C markets, under well-known brands like Soya Supreme and Malta. The revision in ratings also reflects APAG’s strong brand presence and consistent improvement in gross margins, despite the edible oil industry’s sensitivity to foreign exchange and commodity price fluctuations. Although gross margins are improving, mainly due to product mix optimization, net margins remain pressured by rising costs, impacting overall profitability. The liquidity metrics are adequate, though an increase in the receivable cycle has been observed, which will be crucial for future ratings assessments.