Press Release
VIS Reaffirms Entity Ratings of Fatima Sugar Mills Limited
Karachi, April 16, 2025: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Fatima 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 December 22, 2023.
Fatima Sugar Mills Limited (“FSML”) is a public limited unlisted company. It was established on September 20, 1988, and began commercial operations on December 1, 1993. The company manufactures white refined sugar and operates a sugar production facility in Kot Addu, Muzaffargarh, Pakistan with a crushing capacity of 20,000 metric tons per day. The company’s registered office is in Lahore, while its head office is located in Multan. Fatima Sugar Mills Limited is a part of ‘Fatima Group’, which has business interests in fertilizer, textile, energy, sugar and commodities trading sectors.
Assigned ratings incorporate the business risk profile of Pakistan’s sugar sector, shaped by seasonal and cyclical production patterns, procurement competition, regulatory interventions, and exposure to price and interest rate risks. While supply-side remains sensitive to pricing, demand-side risk is moderate to low due to essential nature of the commodity. Discontinuation of government-mandated minimum support pricing for sugarcane from the 2024-25 season may affect supply dynamics going forward.
The assigned ratings also take into account maintenance of adequate profitability level with healthy margins in FY24 with adequate coverage of debt servicing requirements. The company was able to drive sale volume from carryover stock from previous year effectively at good margins while controlling the financial costs arising from carrying inventory.
Going forward, we will continue to monitor the impact of removal of sugarcane support price on availability of sugarcane and procurement costs.
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