Muhammad Atif Chaudhry
PACRA assigns Preliminary rating to Ghani Chemical Industries Limited | PP Sukuk | PKR 800mln | TBI
|Rating Type||Debt Instrument|
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 industry largely possesses an oligopolistic structure, benefiting the players. During FY22 the top line of the Company showed ~9.2% 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 customers 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. GCIL planned to finance the capacity expansion through a mix of equity, bank borrowing, and Sukuk. This PP Sukuk is part of this expansion.
The ratings are dependent upon the company’s ability to sustain its healthy business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remains important. Moreover, upholding of governance framework is vital.
Ghani Chemical Industries Limited is a listed, public concern, incorporated as a private limited company in Nov-15 and subsequently converted to a listed public company. In Jul-19, as part of the Scheme of Compromises, Arrangement, and Reconstruction 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 listing of the company was made on the Nov-22. The Company is a subsidiary (~58.53%) of Ghani Global Holdings Limited which is owned majorly by the Ghani Family. 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”) will issue a Rated, Privately Placed & Secured, Islamic Certificates ("Sukuk") of PKR 800 mln in Jan'23. The Sukuk will be secured by way of a first parri passu charge over the present and future plant & machinery of the Company inclusive of a 25% margin. The proceeds of the instrument will be utilized to finance the capital expenditure requirement at Hattar industrial estate. The tenor of the instrument is 7 years from the date of issue including 2 years of the grace period. Profit will be paid quarterly in arrears on the outstanding principal amount at the rate of 3MK+1.25%. Principal repayment will be paid in 20 quarterly installments till the maturity of the instrument on Jan'30. The instrument also contains the prepayment of the facility amount which can be made only after the expiry of Twelve (12) months from the date of the last disbursement under the facility.