PACRA maintains the entity rating of Siddiqsons Tinplate Limited

The assigned rating of Siddiqsons Tinplate Limited ("STPL" or the "Company") takes prime comfort based on the past proclivity from the sponsors to extend all support financial and otherwise in this time of need. They are fully aware of the current scenario and intend to take the company back on growth trajectory. In recent years, the Company faced significant challenges that impacted the demand for its tinplates i.e. reduction in sales due to tax exemptions in the FATA/PATA region and increased usage of Galvalume in food packaging instead of tinplates. These challenges have led to a decline in production utilization from 25% to 7% over the last three years. To address these issues, SSTPL is engaging with the health commission to highlight the health hazards of using Galvalume in food packaging and working to establish effective controls over sales and income tax exemptions on tinplate imports in the FATA/PATA region, which are being sold in the Pakistani market. Despite these challenges, the Company’s customer base remains intact, reflecting its strong customer profile. SSTPL is also diversifying by exploring export markets in America and the USA, where it has received letters of intent from customers to purchase tinplates. Furthermore, the implementation of anti-dumping duties on Galvalume and the removal of tax exemptions in FATA/PATA are expected to significantly strengthen local demand for tinplates, contributing to the Company’s profitability.
In relation to the arbitration matter in Singapore with supplier 'New Metallurgy Hi-Tech Group Co. Limited (NHMG), an award was rendered by the Singapore International Arbitration Centre ("SIAC") and ordered cost of S$35mln to be paid by STPL to NHMG. Being dissatisfied with the award, STPL filed an Application to Set Aside the Award before the Singapore High Court, which is currently pending adjudication. According to STPL's counsel, Dentons Rodyk & Davidson LLP, strong points have been raised that may lead the Court to rule in favor of STPL. The next hearing is in Mar'2025. Ongoing litigation has prompted the auditor to recommend claim provisioning, delaying audited accounts for Jun'2024 as STPL's management negotiates. An extension has been filed with PSX. Sponsors remain optimistic, believing successful mediation will secure the Company's sustainability and promising future.
The Company’s revenue declined by ~16% to PKR 3,030mln in 9MFY24 (9MFY23: PKR 3,628mln), with a loss after tax of PKR 174mln (9MFY23: PKR 112mln). Equity remains adequate at PKR 3,047mln as of March 2024. Management asserts the Company faces no significant financial risk due to its low-leverage capital structure. Debt obligations are being met with support from its parent, Siddiqson Limited, supporting its credit rating.
The ratings are dependent upon Company’s ability to meet its debt obligations and sponsor's commitment to provide financial support to STPL in the event of any contingency/shortfall in cash flows of STPL.

About the Entity
Siddiqsons Tin Plate Limited, incorporated in 1996 and listed on the PSX, is primarily engaged in manufacturing and selling tin plates, cans, and steel products. The Rafi Family holds the controlling stake, with ~39.61% shares directly and ~15.49% indirectly through Siddiqsons Limited. The remaining shareholding 45% is held by individuals and financial institutions. The Board of Directors, led by Chairman Mr. Tariq Rafi, consists of seven members: two independent directors, three non-executive directors (all representing the Rafi Family), and two executive directors, including the CEO. Mr. Rafi is a seasoned business professional with a track record of successful ventures.