Muhammad Atif Chaudhry
PACRA maintains the rating of Ghani Chemical Industries Limited | Sukuk | Feb-17
The ratings recognize Ghani Chemical Industries Limited's (GCIL) leading and prominent position in the industrial and medical gases sector in terms of production capacity. The board of directors of GCIL has decided to merge G3 Technologies Limited (formerly Service Fabric Limited) with/into GCIL for ultimate PSX listing which is a positive sign and will add comfort to the assigned ratings. During 9MFY22 the top-line of the Company showed ~10%growth and margins also showed improvement at all levels. All three plants remained operational at optimum capacity utilization. GCIL’s fourth 105TPD dedicated plant became operational and started to cater to the demand of renowned industrial customer and would play a pivotal role in top-line and bottom-line growth. Going forward the Company is expected to receive benefits from (a) rising demand from the industrial segment which will be translated into better financial performance (b) Capacity expansions with a new plant with sustained existing capacity utilization (c) reduce reliance on borrowings from financial institutions with rationalized leveraging policy (d) stock exchange listing to capitalize future growth.
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. Consistent growth in market share and improved margins would support ratings.
Ghani Chemical Industries Limited is an unlisted, public concern, incorporated as a private limited company in Nov-15 and subsequently converted to public status. In Jul-19, as part of the Scheme of Compromises, Arrangement, and Reconstruction was undertaken by the Ghani Global Group of Companies, the manufacturing undertaking of Ghani Global Holdings Limited (formerly “Ghani Gases Limited”), along with all assets and liabilities, was transferred to Ghani Chemicals Industries Limited. The Company is a subsidiary (~69.90%) of Ghani Global Holdings Limited which is owned majorly by the Ghani Family (~51.62%). The remaining shareholding lies in Ghani Products (Pvt.) Ltd. The Company's overall capacity stands at ~435 TPD while its product slate consists of Liquid Oxygen, Liquid Nitrogen, Liquid Argon, and Calcium Carbide.
Ghani Chemical Industries Limited (“GICL” or the “Issuer” or the “Company”) issued a Rated, Privately Placed & Secured, Islamic Certificates ("Sukuk") of PKR 1,300 mln 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 starting from the issue date. Profit is being paid quarterly in arrears on the outstanding principal amount at the rate of 3MK+1%. Principal repayment is being paid in 24 quarterly installments till the maturity of the instrument on Feb'24.