PACRA maintains the rating of Ghani Chemical Industries Limited | Sukuk | Feb-17

The rating reflects the prominent position of Ghani Chemical Industries Limited (GCIL) in the manufacturing, sale, and trading of medical & industrial gases and chemicals. The industry largely possesses an oligopolistic structure, benefiting the players, which allows GCIL to consistently deliver high-quality products and services. These gases find diverse applications across various industries encompassing medical, chemical processes, metal fabrication, food processing, oil and gas exploration, and many more. As of now, the product portfolio has stabilized along the demand yield curve, indicating a more balanced and consistent state in the industry. In line with its commitment to expanding and strengthening its operations, the board of directors of GCIL has merged G3 Technologies Limited with/ GCIL and successfully achieved its objective of getting listed on the Pakistan Stock Exchange (PSX). During 3MFY24, the company’s topline clocked in at ~PKR1,213mln reflecting a growth of 12% on a QoQ basis (FY23: ~PKR 4,322mln; FY22: ~PKR 4,214mln). Moreover, the company’s margins improved at all levels. During 3MFY24 the net profit of the company recorded at ~PKR 226mln (FY23: ~PKR 508mln; FY22: ~PKR 870mln). As per the management, all four plants of Ghani Chemical Industries Limited are currently operational and overall capacity utilization stood at ~65%. The Company has already commenced the construction work for the setup of its 5th Air Separation Unit (ASU) Plant of 275 TPD capacity for medical and industrial gases in KPK.
The ratings are dependent on the Company's ability to effectively utilize enhanced capacities. At the same time, management of financial risk, particularly debt coverages, remains important, wherein any further deterioration would have negative implications for the ratings.

About the Entity
Ghani Chemical Industries Limited is a listed entity, incorporated in 2015. The company is primarily engaged in the manufacturing, sale, and trading of industrial, and medical gases and chemicals. The Company is a subsidiary (~58%) of Ghani Global Holdings Limited which is owned majorly by the Ghani Family (~51.62%). The remaining shareholding lies in Ghani Products (Pvt.) Ltd ~18%, directors of the company and the general public. Members of sponsoring family majorly represent Ghani Chemicals’ four-member board. Mr. Masroor Ahmad Khan is the Chairman of the board while Mr. Hafiz Farooq Ahmad holds the office of CEO. They are assisted by a management team with extensive experience and a diversified skillset.

About the Instrument
Ghani Chemical Industries Limited (“GICL” or the “Issuer” or the “Company”) issued a Rated, Privately Placed & Secured, Islamic Certificates ("Sukuk") of PKR 1,300mln in Feb'17. The Sukuk is secured by way of a first parri passu charge over the present and future fixed assets of the Company inclusive of a 20% margin. The proceeds of the instrument are being utilized for swapping multiple existing long-term and short-term facilities into a single facility. While the remaining amount is used in business operations. The tenor of the instrument is seven years. Profit is being paid quarterly in arrears on the outstanding principal amount at the rate of 3MK+1%. Principal repayment is being paid in 27 quarterly installments till the maturity of the instrument on Feb'24. Total markup of PKR 463mln and total principal of PKR 1.24bln has been paid till date.