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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Jun-19

Analyst
Silwat Malik
silwat.malik@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Ismail Industries Limited

Rating Type Entity
Current
(28-Jun-19)
Previous
(31-Dec-18)
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Ismail Industries Limited is one Pakistan's leading confectionery, snacks and biscuit manufacturing company. The ratings reflect the Company’s strong presence in confectionery, biscuits, BOPET and CPP film manufacturing through established brands (Candyland, Bisconni and Astro Films). Growing middle class, coupled with timely capacity enhancements, have led to significant growth in revenues in the recent past. The ratings draw strength from the Company’s diversified revenue stream, supported through plastic film manufacturing units with plans in place for further expansion. Moreover, the Company is expected to make additional investments in associated companies. The Company was able to maintain a solid growth trend in revenues, owing to aggressive marketing campaigns and introduction of new food products, amid an economic slump. The Company maintained margins at the gross level, despite increased costs and a spiraling exchange rate. However, high marketing costs, coupled with increased finance costs and a share of loss from its associate resulted in a squeezed bottom-line. Nonetheless, a solid business profile was maintained. Meanwhile, despite a leveraged capital structure, the Company maintains a strong financial profile, through strong working capital management and adequate coverages.
The ratings are dependent on upholding of the Company’s business as well as financial risk profile. 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.