PACRA Upgrades the entity ratings of Ismail Industries Limited

Ismail Industries Limited ("IIL" or "the Company") is strategically evolving into a structure holding diverse revenue streams, which was the key consideration in the rating upgrade. The Company's total revenue is derived from two key segments (local and export sales). Approximately 55% of the revenue is generated from domestic sales, while around 45% is attributed to export sales. The Company has demonstrated significant growth potential, particularly in its export sales, showcasing substantial expansion in this area. The ratings reflect the growing business of Ismail Industries Limited, supported by sound financial management and strong liquidity. The rating is primarily driven by IIL’s expanding operations, fueled by increased sales volumes in both domestic and international markets, along with the successful introduction of new products. IIL is further expanding its footprint in the UAE by establishing a new Bisconni subsidiary in Abu Dhabi, with an investment of up to $10mln. This move is aimed at capturing the growing biscuit market in the MENA region. The diversity in the revenue stems from well-established brands such as Candyland, Bisconni, Snackcity, Ismail Nutrition, Ghiza Flour, and Astro Films. The ratings also reflect IIL's robust organizational structure, which effectively provides strategic oversight of its strategic investments. IIL’s strong governance framework further strengthens its credit profile. Ismail Industries Limited holds significant investments in its subsidiaries and associates. IIL owns ~78.53% holding of Hudson Pharma (Pvt) Limited, which offers a wide range of products, including inhalation solutions, eye drops, intravenous (IV) infusion injections, and pharmaceutical creams, ointments, and gels for skincare. Additionally, the Company holds ~75% of Ismail Resin (Pvt) Limited, enabling backward integration for the production of PET film resin. IIL's associates include Bank of Khyber, Plastiflex Films (Pvt) Limited, and Innovita Nutrition (Pvt) Limited. IIL’s ratings reflect its improved financial performance, driven by enhanced working capital management and stable cash flows. Strong operational performance, including efficient inventory management, along with the IIL’s ability to maintain profitability despite rising financial costs, has contributed to this positive outcome. Ismail Industries acknowledges the inherent risks within the confectionery industry, including changing consumer preferences and evolving dietary trends. To mitigate these risks, the Company prioritizes product innovation by introducing new offerings, including premium products, designed to enhance profit margins by catering to the needs of high-end consumers. In August 2024, IIL successfully completed the issuance of a new PPSTS amounting PKR 5bln, following the redemption of its previously issued PPSTS amounting PKR 4bln. This latest issuance brings the Company’s total debt funding raised through debt instruments to PKR 11bln.
The ratings are dependent on sustained revenue growth, margin maintenance, and prudent financial management. Prioritizing brand reputation and disciplined debt management are crucial for maintaining the ratings.

About the Entity
Ismail Industries Limited, incorporated in 1988, is a public listed Company. IIL's major business lines are confectionery, snacks, biscuits, nutritional foods 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, (~30%), Mr. Miftah Ismail (~31%), Mr. Ahmed Muhammad (~15%) and associates (~0.7%). Mr. Muhammad Ismail is the Chairman of the Board. The CEO, Mr. Munsarim Saifullah, is supported by an experienced management team