Karachi: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of The Thal Industries Corporation Limited (TICL) at ‘A’ for medium to long term and ‘A-2’ for short term, indicating a stable credit outlook with good credit quality and timely repayment capacity.

According to VIS Credit Rating Company Limited, the ratings reflect TICL’s adequate protection factors and good liquidity, despite potential risks from economic changes. The ratings, which have been stable since the last assessment on August 22, 2023, signify TICL’s sound financial health within the Pakistani industrial sector.

TICL, a part of the Almoiz Group, engages in the production and sale of sugar and electricity, operating two sugar units in Layyah and Chiniot that also generate surplus electricity sold to CPPA. The group spans multiple sectors including beverages, sugar, steel, power, and textiles, with other notable companies under its umbrella like Naubahar Bottling Company and Moiz Textile Mills.

The affirmed ratings consider the moderate business risk profile of the sugar industry, characterized by its low exposure to economic cyclicality and the impact of seasonal variations. These include fluctuations in sugarcane production and the competitive environment, which is moderately low due to the essential nature of sugar and minimal threat from substitutes.

Financial risk assessments also show variations in profitability influenced by sugarcane costs and economic conditions, although the capitalization profile is maintained. Liquidity remains adequate, supporting a stable current ratio despite an extended cash conversion cycle and increased short-term debt.

Future ratings will evaluate the ongoing impact of price volatility in sugarcane and sugar, the cyclical nature of the industry, and competitive dynamics within a fragmented market. Continued improvement in the company’s capitalization and liquidity profiles will be critical under prevailing market conditions.