Press Release
VIS Reaffirms Entity Ratings of Chashma Sugar Mills Limited
Karachi, October 27, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Chashma Sugar Mills Limited (“CSML” or “the Company”) at ‘A-/A2’ (Single A Minus / A Two). The medium to long-term rating of ‘A-’ signifies good credit quality with adequate protection factors, while the Short-term rating of 'A-2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factor. The outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on September 6, 2024.
Listed on the Pakistan Stock Exchange, CSML is principally engaged in the manufacturing and sale of white crystalline sugar, ethanol, and allied by-products. The Company operates two sugar mills located in Dera Ismail Khan, Khyber Pakhtunkhwa, with a combined crushing capacity of 18,000 tons per day, and an ethanol distillery with a daily capacity of 125,000 liters. CSML is a subsidiary of The Premier Sugar Mills & Distillery Company Limited and remains an integral part of the Premier Group, which also holds diversified interests in board manufacturing, consumer goods, polypropylene, and real estate.
The assigned ratings reflect CSML’s integrated operations, long-standing presence in the northern region, and financial flexibility derived from its strong sponsor profile. The Stable Outlook incorporates gradual recovery in operational performance and margin improvement observed during 9M MY25, following a period of depressed profitability in MY24. Ratings are further underpinned by the projected larger sugarcane crushing in the upcoming season and the resulting improvement in financial performance. The expected resumption of irrigation flows from the Chashma Right Bank Canal (CRBC) is likely to support higher cane availability and better recovery rates in the near term.
During MY24, profitability declined sharply due to lower sucrose recoveries, elevated cane procurement costs, and increased finance expenses. However, in 9M MY25, the Company reported signs of stabilization with improved gross margins and better cost control. The ethanol segment continued to support overall cash flows, maintaining utilization levels above 99%, aided by molasses procurement from external sources to compensate for reduced in-house production.
On the financial side, capitalization remained stretched, with gearing and leverage ratios rising to 4.80x and 5.93x, respectively, at end-9M MY25 due to higher short-term borrowings for sugarcane procurement and inventory buildup. Liquidity remained constrained, reflected in a current ratio of 0.85x, though inventory levels and sponsor support continue to provide some cushion. Debt metrics are expected to gradually improve through inventory liquidation and improved cash flow generation over the medium term.
The assigned ratings remain supported by CSML’s integrated business model, experienced management, and the financial backing of the Premier Group. The Stable Outlook reflects expectations of progressive recovery in operational performance, improved coverage metrics, and better cash generation following the normalization of irrigation flows and restoration of cane supply in the upcoming crushing season.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf