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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Muhammad Hassan
muhammad.hassan@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Corporate Rating Methodology (Jul 17) [View]
  • Correlation between long-term and short-term rating scale (Jun 17) [View]

Related Research

  • Sector Study | Food and Allied (Dec 17) [View]
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PACRA Assigns Initial Entity Ratings to Ismail Industries Limited
 Rating Type Entity
Current
(30-Dec-2017)
 Action Initial
 Long Term A
 Short Term A1
 Outlook Stable
 Rating Watch -

Ismail Industries Limited (IIL) is one of the leading confectionary, snacks and biscuit manufacturing company. The ratings reflect IIL’s strong presence in the confectionary industry in particular and in packaged food industry in general. Growing middle class coupled with company’s expansion related investments led to doubling of revenues in last 5 years. Ratings also take comfort from the company’s related diversification of plastic film manufacturing units which itself is one of the leading plastic film manufacturing unit. IIL has a diverse product range delivered through a strong deep rooted distribution network all over the country. Bisconni – Biscuit Brand, is now the leading food segment of the company with 34% share in total revenues closely followed by Candyland with 31% share. In FY17, the company converted some of its short term loan into long term which led to decreased finance cost and hence better profitability. Better profitability coupled with lower finance cost led to better coverages YoY. The ratings also incorporate the company’s its strategic investment in The Bank of Khyber. IIL has a leveraged capital structure due to procurement of expansion related debt.

The ratings are dependent on upholding of the Company’s business as well as financial risk profile. The company plans to further increase its product lines by introducing new products to the market. Prudent management of this expansion related debt to meet its financial obligations will remain a key factor for going forward any rating movement.
About the Entity
Ismail Industries Limited (IIL), incorporated in 1989, is a listed company. The company operates with eight production facilities installed at three locations. IIL’s major business lines are confectionery, snacks, biscuits and plastic films. IIL also have a plastic film manufacturing plant. The company is owned by three brothers of a single Family. Three brothers, Muhammad Ismail, Maqsood Ismail and Miftah Ismail holds 98.8% of total shareholding equally by directly or through their families. Mr. Muhammad Ismail is the chairman of the board. He has over 3 decades of experience of confectionery industry.

The overall control of the Company vests with nine members body. There are three executive, five non-executive and one independent director on the Board. Seven Board members are from single family. The CEO, Mr. Munsarim Saifullah, the one who is outside from the family have over two decades of experience in confectionary sector. He is also supported by an experienced management team.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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