Press Release
VIS Maintains Entity Ratings of The Thal Industries Corporation Limited
Karachi, September 12, 2025: VIS Credit Rating Company Limited (“VIS”) maintained entity ratings of The Thal Industries Corporation Limited (‘TTICL’ or ‘the Company’) to 'A/A2' (‘Single A /A Two). Medium to long term rating of 'A' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings has been revised to ‘Stable’ from ‘Positive’. Previous Rating action was announced on September 16, 2024.
Listed on the Pakistan Stock Exchange, TTICL is a public limited company primarily engaged in manufacturing and sale of sugar. The Company also supply excess electricity to the grid. TTICL operates two sugar manufacturing units located at Layyah and Chiniot, with a combined crushing capacity of approximately 30,000 tons per day (‘TPD’). The Company has an integrated business model, utilizing bagasse-based co-generation facilities at both plants for electricity production. TICL has a total installed power generation capacity of 79 megawatts (‘MW’), with surplus electricity sold to the Central Power Purchasing Agency (CPPA).
Assigned ratings incorporate the business risk profile of Pakistan’s sugar sector, which is characterized by seasonal production patterns, diminishing regulatory oversight, and fluctuations in cane procurement costs and sugar pricing. Sugarcane crushing is concentrated within a limited seasonal window, with year-round inventory management industry-wide practice, thereby exposing industry players to price and interest rate volatility. Structural challenges, including low mechanization and limited investment in crop improvement, continue to restrict productivity. Elevated procurement costs driven by region-specific support prices contributed to cost pressures in MY24, although a policy transition toward market-based pricing has been implemented. Domestic consumption levels remained stable, supported by consistent demand from the food and beverage industry. Despite a reduction in production, carryover stocks provided sufficient availability, prompting approval of export quotas. In MY25, the Company’s operations were impacted by regional differences in pest infestation, affecting sugarcane supply and recovery rates across units.
Change in outlook takes into account the financial risk profile of the Company. Profitability remained constrained due to a supply glut, limited export access, and price fluctuations. Although topline growth was recorded due to volume and price increases, margins were compressed due to elevated procurement costs and inventory losses in the ongoing year. Downstream demand from associated companies provided some support. The capital structure reflects an increase in short-term borrowings to meet working capital requirements linked to inventory buildup, resulting in higher gearing and leverage levels. Debt coverage weakened in the previous year due to higher borrowing costs and lower profitability however it recovered in the current period as financing costs declined. Liquidity continues to remain adequate.
Going forward, recent improvements in domestic sugar prices and the declining interest rate environment are expected to ease stress on margins and enhance financial flexibility. Ratings will remain dependent on the Company’s ability to alleviate pressure on its financial risk profile through improvement in earnings and capitalization indicators.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf