Press Release
VIS Assigns Preliminary Rating to Proposed Long Term Sukuk of Thatta Cement Company Limited
Karachi, September 18, 2025: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of ‘AA- (plim)’ (Double A minus preliminary) to Thatta Cement Company Limited’s proposed PKR 5.5 bn Long-Term Sukuk I (LTS-I) (‘Sukuk’ or ‘the Instrument’).The long-term rating of 'AA- (plim)' denotes high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Outlook on the instrument rating is ‘Stable’. The outstanding entity ratings of THCCL are ‘A/A2’ with a ‘Stable’ outlook. Rating will be finalized on review of final Sukuk documents.
Thatta Cement Company Limited (“THCCL” or “the Company”) was incorporated in Pakistan in 1980 as a public limited company under the repealed Companies Act, 1913 (now the Companies Act, 2017) and was listed on the Pakistan Stock Exchange in 2008. The Company’s principal business activity is the manufacturing and marketing of clinker and cement. The registered office is located in Karachi, while the production facility is situated at Ghulamullah Road, Makli, District Thatta, Sindh.
THCCL plans to issue a secured, listed, and privately placed four-year Sukuk of up to PKR 5.5b (including a PKR 500m green shoe option) at 6M KIBOR + 2.5%, with semi-annual profit payments, to finance the acquisition of a listed operational company.
The assigned rating of THCCL reflect sustained improvement in financial performance, supported by stronger profitability, enhanced liquidity, and a conservative capital structure. Profitability was reinforced by the shift to cost-efficient domestic coal and the commissioning of a 5MW solar project and 4.8 MW wind power plant, which diversified the energy mix and provided an effective hedge against input cost volatility. Capitalization remains conservative, with no long-term debt and minimal reliance on short-term borrowings, translating into low gearing and strong debt-servicing capacity underpinned by healthy cash flows. The planned PKR 5.5b sukuk for acquisition will elevate leverage, but improved core profitability and cash flows from the operational target are expected to support gradual deleveraging and restore capitalization to comfortable levels over the medium term.
Sukuk rating incorporates credit enhancement, including charge over the Company’s present and future current and fixed assets, creation of a Sukuk Payment Account (SPA) funded 30 days prior to payment date, and a signed undertaking, approved by the Board, authorizing sell off of Treasury Shares in case of any shortfall in the SPA for Sukuk repayments. The disposal of Treasury Shares, if triggered, is to be completed within 20 days to ensure the SPA is adequately funded at least 10 days before the payment due date.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Corporate Rating
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf