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The Pakistan Credit Rating Agency Limited
Press Release

Date
14-Dec-20

Analyst
Faiqa Qamar
faiqa.qamar@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
(14-Dec-20)
Previous
(27-Dec-19)
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings reflect the Ismail Industries Limited’s (Ismail Industries or ‘the Company’) strong presence in confectionery, biscuits and plastic film manufacturing through established brands (Candyland, Bisconni, Snackcity and Astro Films). Growing middle class, coupled with timely capacity enhancements, have led to significant growth in revenues of the Company in the recent past. The ratings draw strength from the Company’s diversified revenue stream, supported by the plastic film manufacturing segment. The Company was able to sustain its revenues, owing to aggressive marketing campaigns and introduction of new food products. The food industry remain exemption from the lockdown implemented by the Government to control the spread of COVID-19. However, demand of non-essential food products remain low due to the lockdown as schools and limited movement of people. The Company maintained its margins at the gross level, despite cost-push inflation and rupee depreciation. High marketing costs, coupled with increased finance costs resulted in a relatively low bottom-line. However, significant share of profit was received from its associate company. Nonetheless, business profile remains strong. Ismail Industries’ strategic investments in its associated companies is expected to support the bottom-line, going forward. 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 continued revenue growth and maintenance of margins. Prudent management of expansion and investment-related debt in order to meet financial obligations will be important. Decline in coverages and/or erosion of margins may have a negative impact on ratings.

About the Entity
Ismail Industries Limited, incorporated in 1988, is a public listed company. The Company operates with nine 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 Mr. Muhammad Ismail (~16%), Ms. Almas Maqsood, wife of Mr. Maqsood Ismail, (33%), Mr. Miftah Ismail (31%), Mr. Ahmed Muhammad (~15%) and associates (~4%). 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 seven Board members. There are two executive, three non-executive and two independent directors on the Board. Four 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.