Press Release
Ratings of Almoiz Industries Limited
Karachi, February 27, 2020: VIS Credit Rating Company Limited has placed the entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) assigned to Almoiz Industries Limited (AMIL) under ‘Rating Watch-Developing’ status in the view of planned foreign investment in ISIS Central Sugar Mills Co. Limited in Australia. Once the scheme of acquisition is finalized, as announced by the group on the Pakistan Stock Exchange, the ratings would be reviewed. The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. The previous rating action was announced on October 29, 2018.
The ratings assigned to AMIL take into account its moderate business risk profile emanating from inherent cyclicality & price vulnerability in sugar sector dynamics. AMIL is part of an industrial conglomerate, ‘Almoiz Group’ engaged in the businesses of beverages, sugar manufacturing, steel melting, power generation & textile. AMIL is a family owned company with majority shareholding vested with the sponsoring family. The company is primarily engaged in the manufacturing & sales of sugar, steel deform bars and electricity. AMIL has crushing capacity of 25,000 tons per day while deform bars capacity stands at 150 tons per day. The company is self-sufficient in power generation for its sugar plant while excess power is being supplied to company’s steel unit & to the government.
The sugar production facility is based on multi-feed stock; sugarcane and sugarbeet due to which plant remains operational for a relatively longer period. The main products include refined white sugar, commercial sugar, Pepsi grade sugar and caster sugar. While sugarcane crushing decreased during the year, the cleanup of previous sugar stock, upward trend in sugar prices and increase in sucrose recovery rate positively impacted sales, margins and bottom line in FY19. Given higher cash flows, coverages have improved. Moreover, with lower working capital requirements, short-term borrowings declined, leading to decrease in leverage indicators at end-FY19. The company is not contemplating any CAPEX during the next two years while gearing is projected to remain within acceptable range. However, once the scheme of acquisition of overseas sugar mill mentioned above is finalized, the company would assume a proportionate contingent liability for a FX denominated standby letter of credit to be issued by its overseas associate for acquisition of the overseas sugar mill.
For further information on this rating announcement, please contact the undersigned at (021) 35311861-66 or Maimoon Rasheed at (042) 35723411-13 or mailto:info@vis.com.pk
Javed Callea
Advisor
Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx