PACRA maintains the entity rating of Siddiqsons Tinplate Limited

The assigned rating emanates from Siddiqsons Tinplate Limited’s ("STPL" or the "Company") status as the sole manufacturer of tinplate in Pakistan and the Company's moderately leveraged capital. The Company mainly derives its revenues from the sale of Electrolytic Tinplate (ETP). The sales of the Company are highly correlated with the edible oils sector in the local industry. The total market size of Tin plate coil was ~44,000MTons during CY22 which decreased from ~49,000MTons during CY21 due to restrictions on imports. The total market share of tin plates decreased by ~10% as compared to the previous year. As per management representation, during FY23 the capacity utilization of the Company stood at ~9% decreasing from ~13% during FY22 (FY21: ~25%). Furthermore, STPL is also facing the challenges for conversion CRC coil from local vendor. Both factors i.e. import of raw material and local conversion of HRC into CRC coil impacted the production utilization of the Company. The limited availability of the tinplate impacted the customer choice and forced the customers to opt for alternative modes of packaging. The top line of the Company decreased by ~7% during FY23 and clocked in at PKR ~4.39bln (FY22: PKR ~4.72bln, FY21: PKR ~5.84bln). In FY23, the gross margin and operating profit margin both decreased as compared to FY22. The GP margin decreased from ~13.1% in FY22 to ~9.1% in FY23 due huge rise in manufacturing cost while the OP margin decreased from ~9.1% to ~4.7% during the same period. Resultantly, the net margin of the Company decreased to ~0.1% during FY23 (FY22: ~4.3%, FY21: ~5.5%) due to high finance. Net working capital days have shown a decreasing trend due to better working capital management but the raw material inventory maintained by the Company shielded the Company from the effect of rising steel prices. The Company is exposed to a high level of financial risk as its financial risk profile is characterized by highly leveraged capital structure and a huge decline in coverages. In order to manage the operating risk, the Company is exploring other options for business diversification, which would add support to the betterment of the revenue generation abilities. Furthermore, comfort for the rating has also been drawn from the well-established market position of Siddiqsons Limited.
In relation to the arbitration matter in Singapore with supplier 'New Metallurgy Hi-Tech Group Co. Limited, the management based on the opinion of its legal counsel is confident about a favorable outcome of this matter, and hence no provision has been made in the financials during FY23. So, the auditor's opinion was not modified with respect to this matter. The company has also decided to postpone the CRC project in light of current uncertain economic conditions, an increase in interest rates, and fluctuating dollar prices.
The ratings are dependent upon Company’s ability to sustain its healthy business profile amidst strong competition, herein, the prudent management of financial risk indicators remains important.

About the Entity
Siddiqsons 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 ~39.61% shares, while~15.49% are indirectly held through Siddiqsons Limited. 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 control of the Company vests with the Board of Directors, which comprises seven members. There are two independent directors, three non-executive directors, and two executive directors including the 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 ventures.