The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Maintains Entity Ratings of Ismail Industries Limited

Rating Type Entity
(31-Dec-18 )
(29-Jun-18 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Ismail Industries Limited is one of the leading confectionery, snacks and biscuit manufacturing company. The ratings reflect the Company’s strong presence in the confectionery through established brands (Candyland and Bisconni) and packaged food industry. Growing middle class, coupled with capacity enhancements, have led to significant growth in revenues over the years. Ratings draw strength from the Company’s diversified revenue stream supported through plastic film manufacturing units. Moreover, supplementary dividend income from investments provide support to the Company’s profitability. Aggressive marketing campaigns to promote new products and increasing raw material costs, aggravated by rupee devaluation, have put margins under some pressure. Nonetheless, the Company has been able to maintain a sound business profile. Meanwhile, Ismail Industries maintains a strong financial profile, despite a leveraged capital structure, characterized by robust working capital management and adequate coverages.

The ratings are dependent on upholding of the Company’s business as well as financial risk profile. The company plans to further diversify by expanding its plastic films segment. Additionally, it plans to invest further in associated companies. Prudent management of expansion and investment related debt to meet financial obligations will remain a key factor for future rating movement.

About the Entity
Ismail Industries Limited (IIL), incorporated in 1988, is a public listed company. The company operates with eight production facilities concentrated at three locations. The Company’s major business lines are confectionery, snacks, biscuits and plastic films. Major shareholding of the company lies with Ismail Family (~99%), through Muhammad Ismail (~29%), Almas Maqsood (33%), Miftah Ismail (31%) and associates (~6%). Mr. Muhammad Ismail is the chairman of the board. He has over 3 decades of experience of confectionery industry.

The overall control of the Company vests with nine members. There are three executive, five non-executive and one independent director on the Board. Seven Board members are from the sponsoring family. The CEO, Mr. Munsarim Saifullah, has over two decades of experience in confectionary sector. He is supported by an experienced management team.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.