Press Release
VIS Reaffirms Entity Rating of Alliance Sugar Mills Limited
Karachi, July 03, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Alliance Sugar Mills Limited (“ASML” 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 a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating has remained ‘Stable’. Previous rating review was conducted on June 17, 2025.
Alliance Sugar Mills Limited ('ASML' or 'the Company') is a public unlisted company incorporated in Pakistan in 2011. The Company is engaged in the production and sale of sugar and its by-products. The major shareholding of the Company is held by Mr. Makhdum Omar Shehryar following the transfer of shares completed in June 2026. The Company's registered and head office ('HO') is located at Lahore while the manufacturing unit is located at Ghotki, Sindh.
The assigned ratings reflect Alliance Sugar Mills Limited (‘ASML’ or ‘the Company’) position in Pakistan’s sugar sector and its association with a diversified business group having interests across sugar, ethanol, energy, and other industrial segments. The ratings draw support from the Company’s improved operational performance, driven by higher cane procurement, enhanced production levels, and better recovery rates during the latest crushing season. Profitability strengthened significantly due to favorable sugar prices, inventory realization, and improved operating efficiency, resulting in a return to positive earnings. The ratings also incorporate the Company’s strengthened capitalization profile following profit retention and improved cash flow generation. Liquidity and debt servicing indicators showed improvement, supported by stronger operating performance and cash generation.
The ratings remain constrained by the inherently cyclical and regulated nature of the sugar industry, which is exposed to fluctuations in cane availability, commodity prices, weather conditions, and government policies. The Company’s financial risk profile is further influenced by its reliance on short-term borrowings to fund working capital requirements, particularly during crushing and inventory holding periods. The substantial increase in seasonal borrowings has elevated leverage levels and weakened capitalization metrics. Sustained profitability, timely inventory liquidation, prudent management of working capital borrowings, and maintenance of adequate liquidity will remain important rating considerations going forward.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Corporate Rating
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf