Press Release

VIS Maintains Entity Ratings of Thal Industries Corporation Limited

Karachi, August 22, 2023: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Thal Industries Corporation Limited (TICL) at ‘A/A-2’ (Single A/A-Two). The medium to long-term rating of ‘A’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Positive’. Previous rating action was announced on April 26, 2022.

TICL is part of an industrial conglomerate, ‘Almoiz Group’, engaged in the businesses of beverages, sugar, steel, power & textile. The company is primarily engaged in manufacturing and sales of sugar and electricity. The company has two units for sugar production; one in Layyah and other in Chiniot. TICL has a total power generation capacity of 79 MW. All production units operate on self-generated electricity with surplus power being sold to CPPA. Total sugarcane production in 2022-23 season was reported lower at 82.4m MT vis-à-vis 89.0m MT in the preceding year due to floods. Resultantly, according to sources, sugar production in the country has reported a decrease of ~7%. However, total available sugar stocks are expected to remain largely intact vis-à-vis preceding year. Meanwhile, the Government allowed 250,000 MT of exports due to surplus sugar inventory available in the country in the ongoing year. Sugar prices have exhibited an upward trend lately primarily on account of inflationary pressure. Nonetheless, the ratings do incorporate inherent cyclicality in crop levels and price vulnerability in sugar sector leading to competitive challenges for the company. The ratings also take note of the stay orders granted on penalties imposed by Competition Commission of Pakistan (CCP) on certain sugar mills. VIS will continue to monitor further development in this matter.

The sugar sales account for around four-fifth of the revenue mix of the company, majority of which comprised sales to institutional clients. During the outgoing year, there was some decrease in revenues due to lower volumetric sugar sales amidst suppressed prices. However, gross margins showed improvement on the back of inventory gains emanating from selling low cost carryover sugar stock. Resultantly, net margins increased despite augmentation in finance cost in MY22. In 1H’MY23, the profitability profile improved further as the company sold sugar at relatively higher average rates. This, along with rationalized operating expenses have yielded better net margins. Moreover, ‘Positive’ outlook on the assigned rating is supported by sound cash flow coverages and comfortable leverage indicators maintained by the company on a timeline basis. The ratings also incorporate effective Board oversight and internal controls implemented by the company. Meanwhile, the ratings will remain dependent on sustaining profitability trend, maintaining capitalization and liquidity profiles, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA (042-35723411-13, Ext. 8001) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)

VIS Rating scale

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .