Press Release

VIS Reaffirms Entity Ratings of Deharki Sugar Mills (Pvt.) Limited

Karachi, May 13, 2024: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Deharki Sugar Mills (Pvt.) Limited to 'A/A-2' (Single A/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 'A-2' indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings remains Stable. Previous Rating action was announced on May 17, 2023.

Deharki Sugar Mills Private Limited ("DSML" or "the Company") is a part of the JDW Group and wholly owned subsidiary of JDW Sugar Mills Limited (JDWSML), registered in Pakistan as a private limited company, the mill is situated in the Ghotki district of Sindh. Being a wholly owned subsidiary of JDWSML, the Company draws various benefits from its parent including operational integration. DSML is primarily engaged in the manufacture and sale of crystalline refined sugar.

Assigned ratings incorporates the medium business risk profile of DSMPL, supported by the industry’s moderate barriers to entry, capital-intensive nature, and low inherited technology risk. However, industry’s cyclicality with the production of sugarcane possess raw material availability risk, while inelastic demand linked with the growing population provides assurance to the assigned ratings.

The ratings also consider the financial risk profile of the Company buoyed by positive momentum in the profitability performance on account of higher topline growth backed by volumetric and price increases. The coverage profile of the Company strengthened on account of higher profitability and operational efficacy during the year. The capitalization metrics also improved as the Company prioritizes debt retirement and became the long-term debt free company during MY23, while the liquidity position remains adequate.

Going forward, the ratings of the Company will remain contingent on further improvement in its financial metrics. VIS will continue to monitor the developments of the pending litigation with the Competition Commission of Pakistan (CCP).

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.















Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .