Press Release

VIS Upgrades Entity Ratings of The Thal Industries Corporation Limited

Karachi, April 26, 2022: VIS Credit Rating Company Limited (VIS) has upgraded medium to long-term entity ratings of The Thal Industries Corporation Limited (TICL) from ‘A-’ (Single A Minus) to ‘A’ (Single A) while maintaining short-term rating at ‘A-2’ (A-Two). 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 payment coupled with sound company fundamentals and liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on February 1, 2021.

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.) Limited, Almoiz Industries Limited, TICL & Moiz Textile Mills Limited. TICL is primarily engaged in manufacturing & sales of sugar and electricity. The company has two units for sugar production with an aggregate crushing capacity of 23,000 tpd. Business risk profile draws support from diversification of operations into power sector with generation capacity of 41MW. All production units operate on self-generation electricity with surplus generation sold to CPPA. In MY22, sugarcane production in the country is estimated to be ~11% higher than the preceding period due to increase in area under cultivation on account of favorable weather conditions and higher economic returns. Sugar production is also estimated to increase in tandem with higher cane production and largely intact recovery rates. However, the ratings do incorporate inherent cyclicality in crop levels and price vulnerability in sugar sector.

The company’s topline recorded growth mainly on account of higher average selling prices of sugar along with some increase in volumetric sales. The institutional clients accounted for nearly two-third of the total sugar sales. Despite higher average selling prices of sugar and molasses, gross margins of the company decreased slightly mainly due to the impact of higher raw material cost. The ratings draw strength from adequate liquidity position underpinned by healthy cash flows in relation to outstanding obligations. The company has sound capitalization indicators supported by profit retention and lower debt levels. Maintaining liquidity and capitalization profiles at comfortable levels would remain imperative for the assigned ratings. Meanwhile, VIS will continue to monitor developments related to imposed penalty by Competition Commission of Pakistan and any other matter. Any negative decision by the court of law will be incorporated in the rating action accordingly.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk


Sara Ahmed
Director


VIS Entity Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .