PACRA Maintains the Entity Ratings of Ismail Industries Limited

While having the major dependency on mass marketing, the confectionery, biscuits and snack industry in Pakistan is highly price sensitive. Pakistan's large retail base is highly fragmented and dominated by small retailers. However, a major transformation of establishing large retail chains has been observed, particularly in urban centers. On the other hand, growth in disposable personal income of middle and upper middle class has led to improvement in the consumption pattern of branded non-essential items.
The ratings reflect Ismail Industries Limited’s ('Ismail Industries' or ‘the Company’) diversified revenue stream generating from the well established brands Candyland, Bisconni, Snackcity, Ismail Nutrition, Ghiza Flour and Astro Films. The company has a promising profits in FY23 amounting PKR 6bln (FY22: PKR 2bln). The surge in the profit is due to export sales of the Company, which is increased to PKR ~40bln (FY22: PKR ~15bln). The total revenue of the company stood at PKR ~99bln in FY23 (FY22: PKR ~65bln). This coupled with increased food processing capacity, providing a competitive edge to Ismail Industries and allows the company to maintain its growth trajectory due to a significant surge in both domestic sales and exports. Ismail Industries Limited have investments in its subsidiaries and associates. The company holds 78.53% shares of Hudson Pharma (Pvt) Limited. The company also holds 75% of Ismail Resin (Pvt) Limited that deals with manufacturing of PET resin. The associates of Ismail Industries include Bank of Khyber, Plastiflex Films (Pvt) Limited and Innovita Nutrition (Pvt) Limited. Despite inflation and devaluation, a surge can be seen in the margins of the company as operating profit margin stood at ~12% in FY23 (FY22: ~8%) and net profit margin stood at ~7% in FY23 (FY22: ~5%). The introduction of new product line Giza Flour adds value in the company's profile and profits. The company holds a strong financial risk profile as the capital structure of company is moderately leveraged at ~71%, at FY23 (FY22: ~72%). However, major borrowings remain from SBP at subsidized rates. The Company's working capital management and coverages remain adequate.
The ratings are dependent on continued revenue growth and maintenance of margins. Prudent management of expansion and investment-related debt in order to meet financial obligations is important. Stringent controls on the Company's debt levels remain imperative for sustaining the ratings. Brand reputation through customer satisfaction remains a crucial parameter for the rating.

About the Entity
Ismail Industries Limited, incorporated in 1988, is a public listed company. The Company operates with ten production facilities concentrated at three locations. The Company’s major business lines are confectionery, snacks, biscuits, nutritional food and plastic films.
Major shareholding of the company lies with Ismail Family (~99%), through Mr. Muhammad Ismail (~16%), Ms. Almas Maqsood, wife of Mr. Maqsood Ismail, (~30%), Mr. Miftah Ismail (~31%), Mr. Ahmed Muhammad (~15%) and associates (~8%). Mr. Muhammad Ismail is the Chairman of the Board. The overall control of the Company vests with seven Board members. Four Board members are from the sponsoring family. The CEO, Mr. Munsarim Saifullah, is supported by an experienced management team.