PACRA Maintains Entity Ratings of Siddiqsons Tin Plate Limited

The ratings reflect Siddiqsons Tin Plate Limited’s (Siddiqsons Tinplate or 'the Company') established foothold in the tin plate industry as the first and sole local manufacturer of tin plate in Pakistan. Siddiqsons has a market share of ~30% in the local market. The demand for the Company’s products has shown growth in the recent past due to increased hygiene consciousness of the public at large and higher use of processed food. However, the Company was unable to seize this opportunity due to inconsistent supply of its raw materials and tough competition from commercial importers, signifying business risk. The imposition of Anti-Dumping Duty and higher prices of imported tin plate has improved competitiveness of Siddiqsons Tinplate. The capacity utilization remains low. Margins improved as the Company was able to pass on increased raw material cost to customers. The Company is establishing a Cold Rolled Coil steel manufacturing complex to streamline its raw materials supply through backward integration. This is expected to improve margins and profitability once the project comes online. The Company’s financial risk profile is considered adequate characterized by moderate leveraging, good coverages and stretched working capital. The Company conducted a right issue to partly finance the expansion project. The Company will utilize long-term loans to finance the project. However, the project will start production ~12 months prior to principle repayments for related loans. This is expected to create cushion for repayment from ensuing cash flows. The ratings take comfort from the financial strength of the Siddiqsons group and demonstrated support from sponsors.
The ratings are dependent upon holding sustained operations and improving margins. Successful and timely execution of the planned CRC project is key to uphold ratings. The maintenance of coverages during expansion phase will be critical. External factors and continuity of anti-dumping duty is considered crucial for the sustainability of the Company.

About the Entity
Sidiqsons Tin Plate Limited was incorporated in 1996. It is listed on Pakistan Stock Exchange (PSX). The controlling stake is held by Rafi Family. The family directly holds ~44% shares, while ~15% are indirectly held through Siddiqsons Limited. Around 9.3% shares are held by Arcelor Packaging international. The remaining shareholding is held by individuals and financial institutions. The principal business activity of the Company is manufacturing and sale of tin plates, cans and other steel products. The registered office of the Company is in Karachi. The manufacturing facilities are located at Windhur, Balochistan and Malir, Karachi.

The control of the Company vests with Board of Directors, which comprises seven members. There are two independent directors, three non-executive directors and two executive directors including CEO. All non-executive directors represent Rafi Family. The Chairman of the board is Mr. Tariq Rafi. Mr. Rafi is a seasoned business professional and carries a track record of multiple successful business ventures.