Press Release
VIS Assigns Preliminary Rating to Proposed Long Term Sukuk-1 (LTS-1) of Citi Pharma Limited
Karachi, April 02, 2026: VIS Credit Rating Company Limited (VIS) assigns a preliminary rating of ‘A+(plim)’ (A plus preliminary) to the LTS-1 issue of PKR 2,886.0mn of Citi Pharma Limited (‘CPHL’ or the ‘Company’). The long-term rating of ‘A+(plim)’ indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Outlook on the assigned rating is Stable. The entity rating of CPHL is ‘A/A1’ (‘Single A/A One’).
CPHL was established on October 8, 2012, and began its journey in the pharmaceutical sector following the acquisition of Askari Pharmaceuticals (Private) Limited (APPL) from the Army Welfare Trust in 2013. This strategic acquisition enabled CPHL to inherit APPL's operations, focusing on the production and distribution of Active Pharmaceutical Ingredients (APIs) and formulation drugs. Transitioning into a public unlisted company in October 2020, CPHL achieved a significant milestone by listing on the Pakistan Stock Exchange (PSX) on July 9, 2021. Today, it stands as a key player in Pakistan’s pharmaceutical industry, renowned for producing high-quality APIs like Paracetamol. The Company operates across two core segments—APIs and pharmaceutical formulations—supporting the production of Finished Pharmaceutical Products (FPPs) by combining APIs with other essential compounds.
The proposed Long-term Sukuk will be structured on the basis of Musharakah (Shirkat-ul-Mulk). The Sukuk, amounting to PKR 2,886.0mn, (inclusive of a Green Shoe Option of PKR 1,000.0mn) will be privately placed, and secured. The proceeds are to be used for Company’s working capital requirements, enhanced for the expansion of Formulation segment in the commercial sector, and to finance CAPEX including completion of Bioequivalence center and investment in Citi Veterinary Limited. The Sukuk has a tenor of three (03) years, carrying a profit rate of average 3-month KIBOR plus 100bps, starting from the issue date. Profit will be payable quarterly while principal will be redeemed in eight (8) equal quarterly installments after a grace period of one year. The proposed security structure of LTS includes: 1st pari passu charge over present and future fixed assets of the Company with 25% margin. Ranking charge to be upgraded to 1st pari passu charge within 90 days. Additionally, a dedicated Sukuk Payment Account will be maintained, ensuring that quarterly payments are deposited 5-7 days prior to the due date.
The rating is supported by CPHL’s strong positioning in the API segment of Pakistan’s pharmaceutical sector, which carries relatively low business risk due to stable demand and limited sensitivity to economic cycles. Sustained demand for locally manufactured APIs underscores the strategic importance of domestic production, further reinforced by supportive government policies aimed at import substitution. High entry barriers arising from stringent regulatory requirements, compliance standards, and significant capital intensity limit competitive pressures and contribute to industry stability. The rating also reflects steady revenue growth and improving margin profile, driven by the Company’s gradual diversification into higher-margin formulation products through proprietary brands and institutional sales, alongside expansion in nutraceutical exports. Strategic collaborations with international partners, including Murli Krishna Pharma (India) and Hangzhou Newsea Technology Co. Ltd (China), are expected to enhance operational efficiency through technology transfer and automation, while also supporting medium-term international expansion.
While client and product concentration remain key considerations, management initiatives aimed at broadening the customer base and diversifying the product portfolio are expected to mitigate these risks over time. CPHL maintains a sound profitability profile, supported by topline growth and margin expansion. However, maintaining a balanced capital structure and ensuring alignment of gearing and leverage with growth and cash flow generation capacity will remain important going forward. The assigned rating of the proposed PKR 2,886.0mn Long-term Sukuk reflects its security structure, underpinned by a first pari passu charge over fixed assets, along with additional support through the establishment of a dedicated Sukuk payment account.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Instrument Rating:
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf