Press Release
VIS Assigns Preliminary Rating to Proposed Short Term Sukuk 1 of RYK Mills Limited
Karachi, March 06, 2026: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of ‘A1 (plim)’ (A One (preliminary)) to proposed Short-Term Sukuk 1 issue of up to PKR 4,000 million (inclusive of a Green Shoe Option of PKR 2,000 million) of RYK Mills Limited (‘RYKML’ or the ‘Company’). The short-term rating of ‘A1 (plim)’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The preliminary rating will be finalized upon review of final legal documents. The entity ratings of the Company are ‘A/A2’ (‘A / A Two’) with a ‘Positive’ outlook announced on February 13,2026.
RYK Mills Limited (‘RYKML’ or the ‘Company’) is a public limited company incorporated in 2007 and forms part of the RYK Group. RYKML's business activities include the production and sale of sugar, ethanol, related by-products, as well as the generation and sale of electricity. The Company operates a sugar mill with a crushing capacity of 20,000 tons per day (TPD).
The Company plans on issuing a short-term, rated, secured, privately placed Sukuk of up to PKR 4,000 million (inclusive of a PKR 2,000 million Green Shoe Option) for a tenor of six (06) months. The proceeds from the Sukuk will be utilized to meet the Company’s working capital requirements and to optimize its short-term borrowing profile. The profit rate will be 3-Month KIBOR + 140 bps per annum, with profit payable quarterly on the outstanding principal amount. The principal will be redeemed as a bullet payment at maturity, six months from the date of issuance. The instrument will be secured through a ranking charge over current asset. Additionally, the Issuer will establish and maintain a Debt Payment Account (DPA), which will be funded through scheduled deposits prior to the maturity/redemption date to ensure timely repayment.
The rating draws support from RYK Mills Limited’s presence in the domestic sugar sector, which carries relatively low exposure to economic cyclicality given the essential nature of sugar consumption, though it remains sensitive to fluctuations in sugarcane production, recovery rates, and regulatory interventions. The Company benefits from an established operational footprint, integrated business model, sizeable asset base, and relatively large crushing capacity, which collectively strengthen its competitive positioning. Strategic emphasis on operational efficiency, improved cane sourcing, and cost optimization supports stability across crop cycles. Furthermore, diversification into ethanol and power generation provides an additional revenue stream, partially insulating earnings from volatility inherent in the core sugar business. The rating also reflects the Company’s established market presence and efforts to improve operational stability through better working capital management and financial discipline. The rating also takes comfort from the security structure of the instrument, which includes a ranking charge over current assets and the establishment of a Debt Payment Account (DPA) under exclusive lien in favour of investors, supporting timely repayment. While capitalization indicators remain elevated relative to industry benchmarks, demonstrated sponsor support provides comfort and partially mitigates financial risk concerns. The proceeds from the proposed Sukuk are expected to be utilized for meeting working capital requirements and optimizing the short-term borrowing profile, thereby supporting liquidity management. The rating remains underpinned by the Company’s ability to maintain adequate liquidity buffers, manage leverage prudently, and sustain operational performance in the face of sector-specific risks.
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
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf