Press Release
JCR-VIS Reaffirms Ratings of Al-Noor Sugar Mills Ltd at A-/A-2
Karachi, November 25, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Al Noor Sugar Mills Limited (ASML) at ‘A-/A-2’ (Single A Minus/ A-Two). Outlook on the assigned ratings is ‘Stable’.
The local sugar industry continues to face challenges as prices in the domestic and international market have remained depressed for an extended time period. Prices of sugarcane are regulated by the Government of Pakistan and have depicted a rising trend while market prices of the processed commodity are expected to remain range bound over the foreseeable horizon on account of surplus sugar production.
ASML primarily produces white refined sugar and has also diversified its operations by engaging in the manufacturing of Medium Density Fiber Board (MDFB). ASML also supplies surplus power generated during the crushing season to Water & Power Development Authority. Given improvement in sucrose recovery rate, gross margins were higher during FY13 supplemented by increased volumetric and export sales. While MDFB division continues to support the revenue stream, the division faces stiff competition in the market owing to which margins have declined over the last few years. Overall profitability of the company improved during FY13 on account of improved performance of the sugar division.
Long-term debt of the company continued to increase on a timeline basis; debt servicing coverage remains adequate with improved cash flows reported in the out-going year. Short term borrowings remain a function of unsold stock and raw material inventory. While liquidity position of the company came under pressure during FY12, the same improved during FY13 on the back of better profitability.
For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 (10 lines) or fax to 021-35311873.
Jamal Abbas Zaidi
Deputy CEO