The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Junaid

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PACRA Maintains Entity Ratings of Siddiqsons Tinplate Limited

Rating Type Entity
(24-Dec-21 )
(24-Dec-20 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

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 sales increased by 64% during FY21 and clocked in at PKR ~5.8bln (FY20: PKR ~3.5bln). The increase in sales is primarily attributable to high volumes sold as the Company's competitive position improved compared to the commercial importers due to the rising international steel prices. The raw material inventory maintained by the Company shielded the Company from the effect of rising steel prices. The exports sales kept up the momentum and registered a growth of 116%. The withdrawal of export rebate on steel products by China has resulted as tailwinds for the export sales of the Company. Resultantly, the gross margin of the Company improved significantly to 13.7% during FY21 (FY20: 5.1%). The Company revised its credit policy, which have resulted in better working capital management. The capacity utilization of the Company stood at ~25% (FY20: 20%) which is expected to improve after the establishment of the Cold Rolled Coil (CRC) steel manufacturing complex. This backward integration is expected to streamline the raw materials supply. The Company is currently involved in arbitration with Plant and Machinery (P&M) supplier for the CRC project and is expecting a favorable outcome in the ongoing arbitration. However, an unfavorable outcome can result in an outflow of up to ~PKR 1bln. The Company is currently finalizing the alternate supplier and the project is expected to resume in 1QCY22. The Company is exposed to a modest level of financial risk as its financial risk profile is characterized by moderate capital structure and improved coverages. The Company plans to obtain PKR ~6.9bln debt for the development of the CRC complex. Arcelor Packaging, one of the shareholders of the Company, sold its stake (9.3%) in the Company to the sponsor family in Dec'21. Going forward, the Company aims to improve capacity utilization through a steady supply of raw material from the CRC complex and establish itself as a regional player.
The ratings are dependent upon translation of capital investments into growing profits, holding sustained operations, penetrating new markets and improving margins. The maintenance of coverages during expansion phase will be critical. External factors and continuity of anti-dumping duty on ETP 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 ~41% shares, while ~15% 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 registered office of the Company is in 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 ventures.

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.