Press Release

VIS Reaffirms Entity Ratings of The Thal Industries Corporation Limited

Karachi, September 16, 2024: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of The Thal Industries Corporation Limited (‘TICL’ or ‘the Company’) at 'A/A-2' (‘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 'A-2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remain ‘Positive’. Previous ratings action was announced on August 22, 2023.

TICL is part of the industrial conglomerate, ‘Almoiz Group’ and is primarily engaged in manufacturing & sales of sugar and electricity. The Company has two units for sugar production; one in Layyah and the other in Chiniot. Both sugar units operate on self-generation of electricity with surplus generation sold to CPPA. TICL is a part of the Almoiz Group, which operates in beverages, sugar, steel, power, and textiles sectors. The group's other companies include Wiztec Food Solutions (Private) Limited, Naubahar Bottling Company (Pvt.) Limited -the largest franchisee of PepsiCo in Pakistan, Al-Moiz Industries Limited (AMIL) – operates a sugar plant, steel mills and dehydration plant, and Moiz Textile Mills Limited – a spinning unit.

Assigned ratings incorporate the moderate business risk profile of the sugar industry in Pakistan, characterized by low exposure to economic cyclicality and notable impacts from seasonal variations. This includes the influences of fluctuations in sugarcane production and quality, compounded by cyclicality in crop yields and raw material prices. The competitive risk within the sugar sector is considered from medium to low, with minimal threat of substitutes due to the essential nature of sugar albeit high industry fragmentation.

Assigned ratings also take into account the financial risk profile of the Company. The profitability profile is influenced by variations in sugarcane cost, its availability and quality as well as economic conditions impacting margins. The capitalization profile remains manageable despite the increase in short-term debt. Liquidity has been maintained at adequate levels, with a historically stable current ratio, although recent trends show an increased cash conversion cycle. The coverage profile, though strained by higher financial costs, continues to be sufficient.

Going forward, ratings will reflect impact of the key business and financial risk indicators including price volatility of sugarcane and sugar, the cyclical nature of the industry, and competitive pressures within a fragmented market. Ratings will remain sensitive to the improvement of capitalization and liquidity profiles under the prevailing market conditions.

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

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .