Press Release
VIS Reaffirms Entity Ratings of Faran Sugar Mills Limited
Karachi, May 11, 2026: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Faran Sugar Mills Limited (‘FSML’ or ‘the Company’) at 'A-/A2' (‘Single A Minus/A Two’). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous ratings action was announced on April 11, 2025.
Faran Sugar Mills Limited is a public limited company incorporated in Pakistan on November 03, 1981. The Company’s shares are listed on the Pakistan Stock Exchange, with approximately 80% shareholding concentrated with sponsors and directors. FSML is principally engaged in the production and sale of white crystalline sugar, forming part of Pakistan’s cyclical sugar industry, which is characterized by seasonal raw material availability and exposure to regulatory and commodity price risks. The registered office of the Company is located in Karachi, while its manufacturing facility is situated at Shaikh Bhirkio, District Tando Muhammad Khan, Sindh.
The assigned ratings reflect FSML’s long operational history in the sugar sector and its association with Amin Bawany Group. The sponsor support is evident from recent equity injection in terms of right issue on premium. The company’s strategic investments in associated undertakings have started to generate sustainable income, which has, in turn, supported the company’s bottom line. FSML core operations have also turned profitable after a sluggish MY24. Despite lower capacity utilization and sucrose recovery in MY25, margins improved on the back of higher sugar prices, lower average sugarcane procurement price and lower financial charges. The momentum continues in MY26 with further improvement in margins on account of significantly better sucrose recovery amid largely stable sugarcane procurement price. However, higher industry-wide production expectations may exert pressure on sugar prices, which may partially offset the benefit of improved sucrose recovery on margins, going forward.
The Company’s capital structure improved on the back of equity support and debt reduction at end-MY25, while remaining broadly aligned with the seasonal working capital needs at end-1HMY26. Meanwhile, given low profitability from core operations and high payments related to financial charges, FFO remained negative, thereby having an adverse impact on coverages. Similarly, liquidity remained insufficient. Going forward, the ratings remain sensitive to the Company’s ability to improve internal cash flow generation, improve coverages and liquidity while sustaining margins.
For further information on this ratings announcement, please contact at 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