Press Release
VIS Reaffirms Entity Ratings of Syntronics Limited
Karachi, May 23, 2025: VIS Credit Rating Company Limited (‘VIS’) reaffirms entity ratings of Syntronics Limited ('SL' or ‘Syntronics’ or 'the Company') to 'BBB+/A2' ('Triple B Plus'/'A Two'). Medium to long term rating of 'BBB+' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur 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 remains 'Stable'. Previous rating action was announced on April 08, 2024.
Syntronics Limited (‘SL’ or ‘Syntronics’ or ‘the Company’) was incorporated in 1998 as a Public Company and is principally engaged in manufacturing of Hermetically Sealed Laminated Polypropylene Woven fabric and Sacks, and Flexible Stitched catering mainly to the cement, sugar, flour, fertilizer, and food industries. Head office of the Company is located in Islamabad while the registered office is situated at Industrial Estate, Gadoon Amazai, Khyber Pakhtunkhwa. The Company’s primary sponsor is the ‘Premier Group’ which has exposure mainly in the sugar industry. Moreover, the Company has a 12.5% shareholding in its associated company, Chashma Sugar Mills Ltd
Assigned ratings reflects the Company's business risk profile, which is characterized by significant competition from numerous medium-sized enterprises offering comparable products, thereby heightening competitive pressures on pricing and market share. On the supply side, the industry is heavily reliant on imports of their raw materials, thereby subjecting it to foreign exchange rate vulnerabilities. Complications associated with import processes and the initiation of Letters of Credit (LC) further compound the risk profile for the industry. Moreover, these materials are particularly susceptible to variations in global oil prices, thereby amplifying SL's exposure to price fluctuations and exchange rate uncertainties.
Assigned ratings also incorporate the Company’s financial risk profile, with topline declining in FY24 due to reduced demand for sacks. In response, the Company shifted its focus toward increased production of stitched and flexible stitched bags, as reflected in sales reported during 1HFY25. The Company reported negative bottom line in FY24, mainly due to higher financial charges. However, it rebounded strongly in 1HFY25, largely on the back of one-time gain on sale of plant and machinery. Capitalization indicators remain at adequate levels, reflecting sufficiency of equity to cover debt and liabilities. The Company’s liquidity profile is considered adequate, and coverage metrics reflect a satisfactory debt service coverage ratio (DSCR), supported by improved profitability and a decline in finance costs amid a falling policy rate. Going forward, ratings are dependent upon aligning the payouts while maintaining and improving the capitalization profile of the Company. Moreover, maintenance of profitability profile as well as further enhancement in liquidity profile will also remain important for the ratings.
For further information on this ratings announcement, please contact 021-35311861-64 or email 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