Press Release

Ratings of The Thal Industries Corporation Limited

Karachi, February 27, 2020: VIS Credit Rating Company Limited has placed the entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) assigned to The Thal Industries Corporation Limited (TICL) under ‘Rating Watch-Developing’ status in the view of planned foreign investment in ISIS Central Sugar Mills Co. Limited in Australia. Once the scheme of acquisition is finalized, as announced by TICL on the Pakistan Stock Exchange, the ratings would be reviewed. The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. The previous rating action was announced on October 29, 2018.

The ratings assigned to TICL take into account its moderate business risk profile emanating from inherent cyclicality & price vulnerability in sugar sector dynamics. TICL is part of an industrial conglomerate, ‘Almoiz Group’ engaged in the businesses of beverages, sugar manufacturing, steel melting, power generation & textile. The group companies include Naubahar Bottling Company (Pvt.) Ltd, Almoiz Industries Ltd, The Thal Industries Corporation Ltd & Moiz Textile Mills Ltd. The shareholding of TICL is majorly owned by sponsoring family. The company is primarily engaged in manufacturing & sales of sugar and electricity. TICL has crushing capacity of 23,000 tons per day while power generation capacity is 41 MW out of which 22 MW is being sold to the government.

The company sells refined sugar in the local market with major portion of sugar sales derived from institutional clients while remaining sales are made to wholesalers and traders. While sugarcane crushing decreased during the year, the upward trend in sugar prices along with increase in sucrose recovery rate positively impacted sales, margins and bottom line in FY19. Given higher cash flows, coverages have improved. Moreover, with lower working capital requirements, short-term borrowings declined, leading to decrease in leverage indicators at end-FY19. The company is not contemplating any CAPEX during the next two years while gearing is projected to decrease on account of profit retention. However, once the scheme of acquisition of overseas sugar mill mentioned above is finalized, the company would assume a proportionate contingent liability for a FX denominated standby letter of credit to be issued by its overseas associate for acquisition of the overseas sugar mill.

For further information on this rating announcement, please contact the undersigned at (021) 35311861-66 or Maimoon Rasheed at (042) 35723411-13 or

Javed Callea

Applicable rating criterion: Corporates (May 2019)

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