Muhammad Atif Chaudhry
PACRA maintains the rating of Ghani Chemical Industries Limited | Sukuk | Feb-17
|Rating Type||Debt Instrument|
The rating reflects the prominent position of Ghani Chemical Industries Limited (GCIL) in the manufacturing, sale, and trading of medical & industrial gases and chemicals. These gases find diverse applications across various industries encompassing medical, chemical processes, metal fabrication, food processing, oil and gas exploration, and many more. With the installation of dedicated gas capacites now, the product portfolio has stabilized along the demand yield curve, indicating a more balanced and consistent state in the industry. The demand from the steel, automotive, and shipbreaking industries remained weak due to the country’s macroeconomic challenges. In line with its commitment to expanding and strengthening its operations, the board of directors of GCIL has merged G3 Technologies Limited with/into GCIL and successfully achieved its objective of getting listed on the Pakistan Stock Exchange (PSX). During 9MFY23, the topline of the company declined by ~0.7% as compared to the same period last year however, margins also showed dilution at all levels due to macroeconomic turbulence which resulted in reduced demand by large-scale manufacturing. All four plants of Ghani Chemical Industries Limited are currently operational and overall capacity utilization stood at ~65%. Due to reduced demand from one of the renowned customers, the company’s dedicated plant was under-utilized.
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.
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.
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. 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. Total markup of PKR 448mln and total principal of PKR 1.13bln has been paid till date.