Founded in 1988, Ismail Industries Limited ('ISIL' or 'the Company') was incorporated as a public listed Company in 1989. Mr. Muhammad Ismail, in partnership with his brothers, founded Ismail Industries, which has since become the largest manufacturer and exporter of confectionery products in Pakistan. The Company's flagship brand, Candyland, operates within the confectionery sector. Over the years, Ismail Industries has diversified its portfolio through horizontal expansion, introducing brands such as Bisconni (specializing in biscuits and cookies) and SnackCity (offering chips, peanuts, and other snacks). The Company has made backward integration by ensuring top-quality all-purpose flour (maida) for Bisconni and established Ghiza Flour. Additionally, the Company has pursued vertical integration with the establishment of Astro Plastics, which specializes in the production of BOPET, CPP and BOPP films.Ismail Industries Limited (ISIL), headquartered in Karachi, operates ten production facilities across key industrial zones, including Hub, Port Qasim, and Sundar. The Company’s operations are segmented into Food and Plastics divisions. For FY24, ISIL reported a production capacity of 298,356 MT (FY23: 219,932 MT) in the Food division and 63,000 MT (FY23: 63,000 MT) in the Plastics division, achieving actual outputs of 192,644 MT (FY23: 123,317 MT) and 35,580 MT (FY23: 34,121 MT), respectively. This translates to increased capacity utilization rates of approximately 65% (FY23: 66%) for Food and 56% (FY23: 54%) for Plastics, indicating room for potential production optimization in both divisions. The ISIL's strategic initiative to establish a 'Bisconni' subsidiary in Abu Dhabi, UAE, is a commendable step to tap into the lucrative MENA confectionery market.

The Company’s major shareholding is concentrated with the Ismail Family, holding approximately 99% of the shares. Key stakeholders include Mr. Muhammad Ismail with around 16%, Mr. Miftah Ismail at approximately 31%, Ms. Almas Maqsood (spouse of Mr. Maqsood Ismail) at roughly 30%, and Mr. Ahmed Muhammad with 15%, alongside other associates holding about 0.7%. The remaining shares are held by the general public. This ownership structure remains stable, with the Ismail Family as the primary shareholders. Mr. Muhammad Ismail, who has led the Company for several years, brings substantial industry expertise, supported by the sponsors' vast experience spanning over four decades. In addition to a significant presence in the confectionery, biscuits, and snacks sector, the Group is also active in the plastic films and pharmaceitical.

The Company’s Board of Directors primarily comprises seven members from the sponsoring family, including the Chairman, two non-executive directors, two executive directors, and two independent directors. The Board members bring strong credentials with expertise in diverse fields, including industrial engineering and economics, complemented by in-depth knowledge of the confectionery, biscuits, and snacks sector. The Board operates through two committees: the HR and Remuneration Committee, and the Audit Committee. Meeting minutes are meticulously documented, showing active engagement and substantive discussions from all members, including independent directors. Grant Thornton Anjum Rahman Chartered Accountants serve as the Company’s external auditors and provided an unqualified opinion on the Company’s financial statements for the fiscal year ending June 30, 2024.

The Company has a well-defined organizational structure. Functions such as Accounts & Finance, HR, IT, and Supply Chain are common to the entire organization while Sales and Marketing departments are specific for each brand. Mr. Munsarim Saifullah is the Group CEO. A close associate of the sponsors, he has been involved with the Company since its inception. He has significant experience in production and engineering. Mr. Saifullah is aided by a team of experienced professionals. The Company has no management committees in place. However, members of the senior management regularly communicate and discuss ongoing issues and upcoming plans relating to relevant brands and management functions. The Company has implemented SAP to streamline the flow of information within the Company. All of the Company's products are ISO 22000 certified and have received Halal certifications from SANHA. The Company has an effective internal audit department that reports to the Audit Committee.

In Pakistan, the convenience food market is primarily dominated by domestically produced products. This industry is highly competitive, with products that are particularly sensitive to price fluctuations. A significant portion of the market is also held by unbranded products, which play a notable role. The Company’s portfolio boasts significant market share across its brands, with ‘Cocomo’ standing as the flagship product under the ‘Bisconni’ umbrella. Recent product innovations in the Candyland range—such as Jelly World, Sour Bites, Pizza Jelly, Sweet Bear, Orangy Jelly, Biggy, Buttons, Bisca, Puffs, Cloud9, Punch Candy, and You Chocolate—have further strengthened its market position. Premium Bisconni offerings, including Divine, Mi Amor, Daydream, Digestive, Perfetto, and Chip Hop, also experienced notable sales growth. Additionally, Ghiza and Ismail Nutrition products contributed to higher sales, with the Company’s LNS (Lipid-based Nutrient Supplement) products providing a distinct competitive edge in the market.The Company employs segment reporting for its revenue, which is divided into two primary segments: Food and Plastics. The Company's primary revenue driver is the Food segment, which accounted for approximately 86% of total sales. The Food segment generated revenue of PKR 93bln during FY24. The revenue from food segment during 9MFY25 stood at PKR 68bln (FY23: PKR 74bln). The Plastics segment, contributing approximately 14% of total sales, generated revenue of PKR 15bln in FY24. Whereas the revenue of plastic segment for 9MFY25 stood at PKR 12bln (FY23: PKR 14bln). Company's gross profit margins stood at 22% during FY24, 9MFY25: PKR 21% (FY23: 21%). This improvement was driven by a combination of strong sales volume growth and strategic price adjustments, demonstrating the Company's ability to navigate a challenging market environment and maintain profitability. The Company demonstrated a notable improvement in operational efficiency during FY24 which reflected in the expansion of operating profit margins (FY24: 13%,9MFY25: 10%, FY23: 12%). Despite improvements in operational performance, the Company’s net profit margins remained stable in FY24, with net profit recorded at PKR 6.1bln compared to PKR 6.3bln in FY23. Whereas net profit for 9MFY25 stood at PKR 4bln. While EBITDA increased, the stability in net profitability was primarily due to a significant rise in finance costs, which escalated to PKR 7bln in FY24 from PKR 4bln in FY23.

Working capital IIL’S working capital requirements are a function of its inventory, trade receivables, and trade payables which are financed through shortterm borrowings and FCFO.The Company's working capital management in FY24 showed mixed results. While gross working capital days increased to 77 days due to longer receivable cycles, net working capital days improved slightly to 55 days, indicating better payables management. The average inventory days showed a slight improvement reducing to 37 days in FY24 from 38 days in FY23,reflecting efficient inventory management practices. The current ratio's improvement to 3.6x highlights a strong liquidity position, enhancing the Company's ability to meet short-term obligations.Overall the Company demonstrated effective financial management but must continue to balance liquidity with strategic asset utilization for optimal growth.Coverages The Company's coverage ratio decreased from 3.1x in FY23 to 2.3x in FY24 (9MFY25: 2.5x). This suggests that the Company is spending more of its earnings to cover its finance costs. This is further supported by the decrease in total coverages from 1.6x to 0.7x (9MFY25: 1.1x). Finance cost directly linked to coverages has increased significantly from PKR 4bln in FY23 to PKR 7bln in FY24. This increased burden can strain the Company's ability to meet its financial obligations and indicates potentially higher interest rates and additional debt taken on during the fiscal year. Despite higher finance costs, the Company's FCFO grew by 23%, from PKR 13bln in FY23 to PKR 16bln in FY24 (9MFY25: PKR 9.2bln). This growth in operational cash flow is a positive indicator of the Company's strong operational performance and cash generation capabilities. The Company's ability to manage its debt and maintain financial stability will be crucial in the coming periods Capitalization The Company exhibits a highly leveraged capital structure, with a leverage ratio consistently at 68% during FY24 (9MFY25: 67%). While this reflects a slight improvement due to an increase in the equity base, the overall financial risk remains elevated. A 68% leverage ratio signifies heavy reliance on debt financing, which may heighten the Company's vulnerability to interest rate fluctuations and market uncertainties. Total borrowings increased from PKR 42bln in FY23 to PKR 50bln in FY24 (9MFY25: PKR 55bln). This rising trend indicates an aggressive funding strategy, possibly to finance growth or manage working capital. Long-term Debt declined from PKR 23bln in FY23 to PKR 20bln in FY24, suggesting repayment of obligations. Short-term borrowings Reduced from PKR 15bln in FY23 to PKR 14bln in FY24 (~28% share in total borrowings), reflecting a focus on short-term debt reduction and liquidity management. The Company is currently fulfilling its working capital requirements through the issuance of Privately Placed Subordinated Term Sukuks (PPSTS). In this regard, the Company has issue new PPSTS amounting PKR 8bln during Feb, 2025, as a replacement for the previously issued PPSTS of PKR 5bln, which is set for redemption on February 24, 2025.

The Company is in the process of issuing a rated, privately placed, unsecured short-term Sukuk amounting upto PKR 8.0bln (inclusive of PKR 3bln green shoe option) in Aug25, to finance the working capital requirement of the Company. This PPSTS 5 will be issued in replacement of PPSTS 4 amounting to PKR8bln which will matures on 18 Aug, 2025. The tenor of the instrument will be 6 months. PPSTS-5 will carry a profit rate of 3MK-5bps. Profit and principal will be realized at the time of maturity.

The instrument is unsecured.

Facility Covenants are mutually agreed between the Issuer and the Financial advisors and arrangers in the Facility Documents. All applicable Regulations and Guidelines issue by the Securities & Exchange Commission of Pakistan (“SECP”).