The Pakistan Credit Rating Agency Limited
Press Release


Faiqa Qamar

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Upgrades Entity Ratings of Ismail Industries Limited

Rating Type Entity
(09-Dec-22 )
(10-Dec-21 )
Action Upgrade Maintain
Long Term A+ A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The confectionery, biscuits, and snacks industry in Pakistan is highly price elastic and has a major emphasis on mass marketing. Pakistan has a large retail base though it is highly fragmented and dominated by small retailers, competing in terms of location, personal relationships and product ranges etc. However, a major shift has been observed with the opening of a growing number of large retail chains, especially in metropolitan cities. Growth in the urban middle class and an increase in personal disposable income have improved the consumption pattern and influx of branded non-essential items.
The ratings reflect Ismail Industries Limited’s ('Ismail Industries' or ‘the Company’) diversified revenue stream emanating from well-established brands - Candyland, Bisconni, Snackcity, Ismail Nutrition, and Astro Films. This provides a competitive advantage to the Company. Ismail Industries has been able to sustain growth trajectory owing to a substantial increase in both, local and export market sales. This coupled with capacity enhancements has supported the Company's topline. Despite cost-push inflation and rupee devaluation, margins remain supplemented with sustained profitability. Moreover, stable share of profit from associated companies provides support to the Company's bottom line. Ismail Industries envisions becoming a self-sustaining entity by vertically integrating and setting up a flour and cereal plant. Moreover, lately, the introduction of new food products indicates a strong business profile of the Company. Ismail Industries maintains a strong financial risk profile. The capital structure is considerably leveraged; however, major borrowings remain from SBP at subsidized rates. The Company's working capital management and coverages remain strong.
The ratings are dependent on continued revenue growth and maintenance of margins. Prudent management of expansion and investment-related debt in order to meet financial obligations is important. Stringent controls on the Company's debt levels remain imperative for sustaining the ratings. Any significant decline in coverages and/or erosion of margins may adversely impact the ratings.

About the Entity
Ismail Industries Limited, incorporated in 1988, is a public listed company. The Company operates with nine production facilities concentrated at three locations. The Company’s major business lines are confectionery, snacks, biscuits, nutritional food and plastic films.
Major shareholding of the company lies with Ismail Family (~99%), through Mr. Muhammad Ismail (~16%), Ms. Almas Maqsood, wife of Mr. Maqsood Ismail, (~30%), Mr. Miftah Ismail (~31%), Mr. Ahmed Muhammad (~15%) and associates (~8%). Mr. Muhammad Ismail is the Chairman of the Board. The overall control of the Company vests with seven Board members. Four Board members are from the sponsoring family. The CEO, Mr. Munsarim Saifullah, is 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.