PACRA Maintains Entity Rating of Tariq Glass Industries Limited

Tariq Glass Industries Limited's (the “Company” or “TGL”) ratings reflect a well-reputed oligopolistic business profile and strong presence in the glass industry. TGL has built a formidable foothold in the glass industry, being a premier manufacturer of tableware, float glass, container ware, and opal glass in the country. TGL’s facilities are capable of manufacturing clear, colored, tinted, reflective, and sandblasted float glass through an online CVD coating mechanism, and mirrors through the latest spectrum technology. The company intends to sustain growth by broadening its export base and investing in the induction of state-of-the-art manufacturing technology to achieve cost efficiency and meet global quality standards. In float glass, the competition is a duopoly and as per TGL’s management, they claim to have ~50% market share under the brand name of “Tariq Float Glass” which has now been rebranded as "ToyoNasic Float Glass". The Pakistan glass industry is directly linked with economic activity in the construction sector. During recent years, an economic slowdown, hyperinflation, and reduced purchasing power of consumers have hindered the demand for construction materials including glass. In tableware and opal glass TGL has a legacy of over 4 decades and owns famous brands like Toyo Nasic, Omroc, Nova, Rockware, Gemware and Spinrex. The tableware market is emerging more competitive however, the Company has maintained an impressive market share of ~70% by providing value-added products, tailored to the requirements of household and commercial sectors. In container-ware, TGL supplies to the beverage industry along with other industrial consumers. The key pillars of business strategy include (a) quality and reliability of products and (b) economies of scale. During FY23, the company’s topline has shown a slight dip mainly owing to a decline in sales volumes attributable to reduced demand in the market and low capacity utilization of ~50% owing to the closure of one plant each of float glass and tableware on account of repair and maintenance. However, the process has been completed and the plant is ready to commence production now. TGL’s profitability margins have also diluted owing to increased energy costs and elevated interest rates. Recently, TGL has entered into a JV (a green field and export-oriented project) with ICI Pakistan to explore the global export market of glass and link their future revenue streams in USD. Going forward, the company’s revenue stream will benefit from the diversification resulting from the acquisition of a ~42% stake in Balochistan Glass Ltd through a recent share purchase agreement, which will pave the way in strengthening the container-ware segment by addition of pharmaceutical bottles/containers in the product portfolio. TGL is taking cognizance of the corporate governance structure with independent oversight and formulated board committees. The Company is led by an experienced management team and the operations of the Company benefit from a sound system of internal controls implemented across the organization. The financial profile is demonstrated by healthy coverages, an adequate working capital cycle and comfortable cashflows. The capital structure is moderately leveraged mainly comprising long-term borrowings on concessionary rates (LTFF) to support capacity expansion and BMR.
The ratings are dependent on sustainable profits and market share while retaining sufficient cash flows and coverages. However, adherence to maintaining its debt metrics at an adequate level is a prerequisite.

About the Entity
Tariq Glass Industries Limited (TGL) is a public listed company incorporated in 1978. Mr. Omer Baig is the CEO owns ~40% shareholding of the company. The board comprises 7 members including 2 executive directors, 3 non-executive directors, and 2 independent directors.