Muhammad Atif Chaudhry
PACRA Assigns Preliminary rating to Ghani Chemical Industries Limited | PP Sukuk | PKR 800mln | TBI
|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. The demand from the steel, automotive, and shipbreaking industries remained weak due to the country’s macroeconomic challenges. The Company has generated a topline of ~PKR 3.15bln during 9MFY23 (9MFY22: ~PKR 3.17bln). The top line of the Company slightly decreased by ~0.6% as compared to the corresponding period. Ghani Chemical Industries Limited generated a bottom line of ~PKR 426mln during 9MFY23 (9MFY22: ~PKR 674mln). The bottom line of the Company decreased by ~36% during 9MFY23. The decline in profitability is attributable to higher cost of production and finance cost. GCIL planned to finance the capital expenditure requirement at Hattar industrial estate through a mix of equity, bank borrowing, and Sukuk. The rating of the instrument captures the strength of the security structure, primarily from the DPA mechanism. A debt payment account (DPA) will be maintained with the agent bank. One-third of the upcoming quarterly installment will be built up each month in such a way that the entire upcoming installment will be deposited in DPA 30 days before the installment payment date. As per management representation, Shariah compliance certificate from SECP has already been obtained however, the post issuance legal opinion approval for instrument is pending, which is expected to take approximately two weeks.
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.
Ghani Chemical Industries Limited (“GICL” or the “Company”) is in the process of issue a Rated, Privately Placed & Secured, Islamic Certificates ("Sukuk") of PKR 800 mln in Nov23. 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. A DPA also maintained with the agent bank. The proceeds of the instrument will be utilized to finance the capital expenditure requirement at Hattar industrial estate. The tenor of the instrument will be 6 years from the date of issue including 2 year 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 16 equal quarterly installments amounting PKR 50mln each till the maturity of the instrument on Nov'29. The instrument also contains the prepayment of facility amount which can be made only after the expiry of Twelve (12) months from the date of last disbursement under the facility, with fifteen (15) days prior written notice to the facility agent, in the denomination PKR 50mln or multiple thereof.