Press Release
VIS Reaffirms Entity Ratings of Fatima Sugar Mills Limited
Karachi, May 04, 2026: 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 rating is ‘Stable’. Previous ratings action was announced on April 16, 2025.
FSML is a public unlisted company incorporated in 1988 with commercial operations commencing in 1993. The Company is principally engaged in the manufacturing and sale of white sugar, along with molasses as a by-product. Its production facility, located in Kot Addu, District Muzaffargarh, has a crushing capacity of 20,000 MT per day. The Company’s head office is situated in Multan, while its registered office is based in Lahore.
The assigned ratings reflect the Company’s stable operating profile within the seasonal sugar sector and demonstrated ability to generate resilient earnings across cycles. Revenue growth in MY25 was supported by higher sugar volumes and improved pricing, while profitability remained stable at the net level mainly due to margin compression, an outcome of higher average sugarcane procurement price and lower sucrose recovery. In 1HMY26, profitability strengthened primarily due to improved sucrose recovery driven by in-house agronomic initiatives, resulting in higher operating and net margins.
Capital structure indicators improved significantly in MY25 on account of strong internal cash generation and reduced short-term borrowings. However, leverage and gearing increased at end-1HMY26 due to seasonal inventory build-up, consistent with industry working capital cycles. Liquidity and debt servicing capacity remained adequate, supported by improved DSCR and short-term debt coverage in MY25, though FFO-short-term debt temporarily weakened in 1HMY26 due to seasonal borrowings.
Going forward, ratings remain sensitive to sugar price dynamics, export quota and working capital volatility.
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