Press Release
VIS Upgrades Entity Rating of JK Sugar Mills (Private) Limited
Karachi, June 20, 2025: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term rating of JK Sugar Mills (Private) Limited (‘JKSML’ or ‘the Company’) from ‘BBB+’ (Triple B Plus) to ‘A-’ (A Minus) while maintaining the short-term rating at ‘A2’ (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 action was announced on May 13, 2024.
JKSML, incorporated in Pakistan in 2017 as a private limited company, is engaged in the production and sale of crystalline sugar and commercialization of sugar by-products such as bagasse, molasses, and mud. The Company operates with two manufacturing units: Unit I in Khanewal, Punjab, and Unit II in Ghotki, Sindh, with its registered office in Karachi.
The assigned ratings reflect medium-risk profile of the sugar sector in Pakistan, characterized by stable demand dynamics, seasonal and cyclical production, government intervention, and exposure to price and interest rate fluctuations. Sugarcane cultivation remains geographically concentrated and time-sensitive, increasing procurement challenges and cost volatility. Regulatory changes, including the discontinuation of the minimum support price policy, have shifted procurement dynamics. Despite inelastic demand, driven by population growth and industrial use, mill clustering in cane-growing regions intensifies competition. Sector fundamentals remain under pressure due to weather-related production disruptions, lower sucrose recovery in the 2024–25 crushing season, and a domestic supply shortfall.
The rating upgrade incorporates significant improvement in JKSML’s financial risk profile owing to deleveraging of balance sheet following the early repayment of substantial long-term debt in 1HMY25. The deleveraging is anticipated to continue as the Company majorly exits the seasonal working capital cycle by year-end, thereby reducing short-term borrowings as well. The assigned ratings also incorporate improvement in the profitability performance which is expected with recent rise in average sugar selling prices which is likely to yield inventory gains on carried-over stock in 2HMY25. Moreover, the downward revision of the SBP policy rate will further ease interest burden, supporting the Company’s earnings and debt servicing capacity. Overall, the financial indicators are expected to commensurate with the assigned ratings.
Looking ahead, the ratings will remain sensitive to movement in sugar prices, changes in export policy, and any adverse interest rate fluctuations. The trajectory of future ratings will depend on the Company’s ability to maintain a prudent capital structure, sustain improvement in gross margins and profitability, and maintain adequate debt coverages. The ratings also factor in the continued willingness and ability of the sponsors to provide financial support, if required.
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