PACRA Assigns Initial Entity Ratings to ACT Polyols (Pvt.) Limited

ACT Polyols (Private) Limited ("ACTP" or "the Company") is among Pakistan's limited domestic producers of rice-based glucose syrups and polyols. The ratings reflect its established market positioning, certified non-GMO and organic platform, growing exports, and the institutional strength of its equal three-way joint venture ownership. The sponsoring groups have a longstanding relationship and successful joint venture history across energy and engineering, reflecting stability and long-term commitment, while also providing demonstrated financial and strategic support. Pakistan's rice-based sweetener and polyols industry remains concentrated, with domestic demand for glucose syrups, sorbitol, and related derivatives historically import-dependent, primarily catering to confectionery, pharmaceutical, and oral care sectors. Rice-based ingredients benefit from their natural non-GMO profile, while rising demand for clean-label and organic ingredients in Western markets continues to support sustainable export opportunities for certified producers with diversified offerings. ACTP maintains a meaningful export footprint in the US and Europe through established distribution arrangements, while domestically, confectionery manufacturers are captive off-takers for glucose syrup, and multinational oral care and pharmaceutical companies are key sorbitol customers. Rice is primarily sourced domestically, and the Company engages affiliated entity ACT Engineering for operations and maintenance. Plant utilization for rice glucose syrup improved to ~79% in FY25 (FY24: ~73%), while sorbitol utilization moderated following a temporary machinery breakdown that has since been resolved. The Company follows an inventory-intensive working capital model due to seasonal rice procurement. ACTP reported net turnover of PKR 4.31bn in FY25, while 9MFY26 revenue reached PKR 4.73bn, reflecting continued topline growth. Profitability strengthened materially, with 9MFY26 PAT surpassing FY25's full-year level, supported by lower finance costs from monetary easing and insurance claim proceeds from the temporary shutdown. Working capital remains stretched due to seasonal procurement, though capitalization improved, with gearing declining to 59.7% in FY25 (FY24: 63.8%). Sponsor support remains evident through subordinated loans and advances against share issuance, both classified as quasi-equity. The medium-term outlook is supported by ACTP's competitive cost position, rising international demand for clean-label and non-GMO ingredients, and planned expansion into higher-margin value-added products (crystalline and powder-based polyol derivatives and specialty proteins), expected to improve margins, capacity utilization, and export market penetration.
Ratings will depend on ACTP's timely execution of its planned value-added powder and crystalline product expansion to structurally enhance revenues and net margins, followed by sustained export growth, especially to the US and Europe where clean-label and organic-certified products command premium pricing. The evolving competitive landscape remains a key consideration, as increasing industry participation may gradually reshape sector dynamics. While ACTP's early-mover position currently provides a meaningful advantage in brand positioning and market access, this edge may gradually moderate as new entrants scale up and competition intensifies. On the operational and financial front, continued improvement in working capital management, cash conversion efficiency, and disciplined use of short-term financing will remain critical for maintaining the Company's financial risk profile.

About the Entity
ACT Polyols (Private) Limited was incorporated in May 2017 and began commercial operations in May 2021. The Company operates a facility in Nooriabad, Sindh, producing rice glucose syrup, sorbitol, maltitol, maltodextrin, syrup solids, and rice protein under non-GMO, organic, and clean-label certifications. It is an equal three-way joint venture among the Akhtar Group, Ismail Industries Limited (Candyland), and the Tapal Group, led by CEO Mr. Asad Muhammad Iqbal, with Board representation from sponsors and Mr. Shahbaz Abdul Ghaffar serving as Chief Financial Officer.