Press Release
VIS Reaffirms Entity Ratings of Madina Sugar Mills Limited
Karachi, October 09, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Madina Sugar Mills Limited (‘’MSML’’ 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' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains Stable. Previous rating action was announced on August 13, 2024.
Madina Sugar Mills Limited (‘MSML’ or the ‘Company’) was incorporated in Pakistan on 05 June 2007 as a public limited company under the Companies Ordinance, 1984. The Company is engaged in the production and sale of sugar and ethanol, along with a recently added steel segment. It is part of the Madina Group of Industries, which has been active in sugar and other businesses since the late 1980s.
MSML benefits from its diversified operations across sugar, ethanol, and steel, alongside cost efficiencies from in-house power generation and packaging facilities. The Company’s profitability has been supported by higher sugar prices and resilient ethanol margins, though output remains constrained by weaker cane availability, lower recoveries, and underutilization of steel division, which is still in its early ramp-up phase. While gross margins have improved, rising finance costs from working capital borrowings have curtailed bottom-line growth. Recently established steel unit has begun contributing to revenues, but is still in its early ramp-up phase. Debt levels have risen significantly due to inventory build-up, which has weakened capital structure indicators, though these are expected to normalize as stock liquidation proceeds. Liquidity has remained adequate with coverage ratios remaining above minimum comfort levels, but high working capital requirements and reliance on short-term borrowings remain key risks. Overall, the ratings reflect a balance of operational diversification, sponsors support, and stable liquidity against cyclical industry pressures, elevated leverage, and earnings volatility. Going forward, the ratings will remain sensitive to the Company’s ability to achieve profitability targets, continued favorable trends in international ethanol demand and pricing, as well as recovery and efficiency improvements in the sugar and steel segments.
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