Press Release

VIS Reaffirms Entity Ratings of Ashraf Sugar Mills Limited

Karachi, April 26, 2024: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Ahsraf Sugar Mills Limited to 'A-/A-2' (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 '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 March 17, 2023.

Ashraf Sugar Mills Limited (‘’ASML’’ or ‘’the Company’’) is part of the Ashraf Group of Industries and was established in 1978. The group is engaged in various sectors including sugar production, coal mining, stone quarrying, livestock and dairy farming, power generation, corporate agriculture farming, and real estate development. ASML, headquartered in Lahore, operates its mill in Ashrafabad, District Bahawalpur, producing refined sugar, molasses, and other by-products primarily for domestic market.

Assigned ratings incorporates the medium business risk profile of ASML, 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 reflected by decline in the topline but growth in margins driven by improving sugar price as well inventory gains. The coverage profile of the Company improved on account of higher profitability during the year while the capitalization metrics weakened owing to higher drawdown of short term borrowings to finance the working capital requirements. The liquidity position however remains adequate.

Going forward, ratings will remain sensitive to the Company’s revenue growth and improvement in the financial metrics.

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 .