PACRA maintains the rating of Ghani Chemical Industries Limited | PP Sukuk | PKR 800mln | Jan-24

The rating incorporates Ghani Chemical Industries Limited's ("GCIL" or the "Company") strong standing in the manufacturing and trading of medical and industrial gases and chemicals. These gases serve a wide range of applications across multiple sectors, including healthcare, chemical processing, metal fabrication, food processing, and oil & gas exploration. The industry is led by two major players known for providing high-quality industrial and medical gases and services. While demand for medical gases has stabilized, the performance of industrial gases remains closely tied to large-scale manufacturing activities. As a result, companies are strategically adjusting their product offerings to better meet current market needs, creating a more balanced and predictable industry environment. Moreover, GCIL is constructing Pakistan's largest air separation unit (ASU) for producing medical and industrial gases and the Company is also developing a calcium carbide manufacturing project aimed at reducing imports, which is expected to save significant foreign exchange and improve the country's reserves. In 9MFY24, the Company achieved a topline of ~PKR 3.64bln (FY23: ~PKR 4.33bln), reflecting a growth of about ~15.7% as compared to the SPLY. GCIL reported PAT of ~PKR 666mln during 9MFY24 (FY23: ~PKR 508mln) indicating an impressive increase of ~56% as compared to the SPLY. GCIL's capital structure is leveraged, with long-term borrowings supporting expansion and short-term loans for working capital management. In Jan'24, the Company issued PP Sukuk, whose rating reflects the strength of its security structure. The debt payment account (DPA), managed by an asset management company (AMC), ensures that one-third of the next quarterly installment is set aside each month, with the full amount deposited into the DPA 30 days before the due date. The Company's financial risk profile is considered adequate, with comfortable cash flow coverages and a well-managed working capital cycle.
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.

About the Entity
GCIL is a listed entity, incorporated in 2015. The Company is a subsidiary (~56%) of Ghani Global Holdings Limited which is owned majorly by the Ghani Family (~52.64%). The remaining shareholding lies in Ghani Products (Pvt.) Ltd ~18%, directors of the Company and the general public. Members of the 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.

About the Instrument
The Company issued a Rated, Privately Placed & Secured, Islamic Certificates ("Sukuk") of PKR 800mln on 16-Jan-24. The Sukuk is 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 is also maintained with the agent AMC. The proceeds of the instrument are being used to finance the capital expenditure requirement at Hattar Industrial Estate. The instrument has a 6-year term, including a 2-year grace period, with profit paid quarterly at a rate of 3MK + 1.25%. Principal repayments will be made in 16 equal quarterly installments of PKR 50 mln, completely maturing in Jan 2030.