Press Release
VIS Reaffirms Entity Ratings of Shahtaj Sugar Mills Limited
Karachi, June 22, 2026: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Shahtaj Sugar Mills Limited (“SSML” or “the Company”) at 'A-/A2' (Single A minus/A Two) with a “Stable” outlook. 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. Previous rating action was announced on June 05, 2025.
SSML was incorporated in Pakistan on March 27, 1965 as a public limited company and is listed on the Pakistan Stock Exchange (PSX). SSML is principally engaged in the manufacture and sale of white crystalline sugar from sugarcane, with a crushing capacity of 12000 MTD. Molasses and bagasse are generated as key by-products of the production process. The Company's registered office is situated at West Wharf, Karachi. Subsequent to MY25, the Company commenced commercial operations of its 32MW bagasse-based cogeneration power plant. The Company operates as part of the Shahnawaz Group, one of Pakistan's established business groups with a diversified presence across sugar manufacturing, food and beverage processing, textiles, automotive distribution, and information technology services. The Group traces its origins to the business established by the late Chaudhry Shah Nawaz and comprises several notable entities, including Shahtaj Sugar Mills Limited, Shezan International Limited, Shahtaj Textile Limited, Shahnawaz (Private) Limited, and Information Systems Associates Limited.
The assigned ratings reflect Company’s long operational track record in the sugar industry and its association with the diversified Shahnawaz Group. During MY25, revenues remained relatively flat as lower sugar production resulting from constrained cane availability and weaker sucrose recovery was to a large extent offset by better pricing. The commencement of the 32MW bagasse-based cogeneration power plant in MY26 is an important step in diversification and its performance will have a strong bearing on the company’s future risk profile.
Profitability remained subdued in MY25 due to lower recovery rates affecting production cost; however, earnings were supported by reduced finance costs and higher other income. Performance improved in 1HMY26, driven by stronger sugar prices, improved sucrose recovery, and contributions from power generation. The capital structure improved modestly in MY25 but weakened temporarily in 1HMY26 due to seasonal working capital borrowings. Liquidity and debt coverage indicators remained constrained in MY25, though both showed improvement during 1HMY26.
Going forward, the ratings remain sensitive to sugar market dynamics, the Company’s ability to sustain profitability and cash flow generation, timely recovery of receivables arising from electricity sales and prudent management of working capital and leverage levels.
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