Press Release

VIS Reaffirms Entity Ratings of Tariq Corporation Limited

Karachi, April 23, 2025: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Tariq Corporation Limited (‘TCORP’ or ‘the Company’) at 'BBB/A3' (‘Triple B/A Three’). Medium to long term rating of 'BBB' indicates adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of 'A3' suggests Fair likelihood of timely repayment of short-term debt obligations with satisfactory liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous ratings action was announced on February 19, 2024.

Tariq Corporation Limited (Formerly: Husein Sugar Mills Limited) (‘TCORP’ or ‘the Company’) is a public limited company incorporated on February 14, 1966 in Karachi and commenced operations in April 1966. The shares of the Company are listed on Pakistan Stock Exchange Limited. The Company is principally engaged in the business of production and sale of sugar and its by-products. Its registered office is in Lahore, whereas the mills/plant are located in Jaranwala, approximately 80 km from Lahore and 40 km from Faisalabad.

Assigned ratings incorporate the business risk profile of Pakistan’s sugar sector, influenced by seasonal production, procurement competition, regulatory interventions, and exposure to price and interest rate risks. Year-round stockholding due to a concentrated harvest exposes mills to price volatility and inventory costs. Limited mechanization and weather sensitivity constrain crop yields and sucrose recovery. Mill clustering near cane areas raises procurement competition and raw material costs. Demand-side risk remains moderate to low given the essential nature of sugar. Profitability is vulnerable to price fluctuations driven by stock levels, harvesting patterns and policy actions. Regulatory controls, including trade restrictions, affect pricing and inventory decisions. The discontinuation of minimum support pricing from 2024-25 may impact supply dynamics. Despite ongoing risks related to procurement, pricing, and policy, demand remains stable due to population growth and increasing bulk usage. Government intervention in trade and pricing policies will continue to shape sector dynamics and business risk.

The assigned ratings also take into account TCORP’s financial risk profile, characterized by a decline in revenues due to lower production levels, though average sugar price increased during the year. Profitability indicators weakened due to a higher raw material cost, which offset gains on pricing. Bottom-line support was provided through deferred tax income. Liquidity and coverage indicators reflected pressure as lower operational profitability resulted in stress on funds from operations, despite a reduction in financial charges compared to the previous year. Nonetheless, proceeds from asset disposals provided support to cash flows, aiding in debt servicing. Coverage metrics however partially recovered in the subsequent half-year period. Short-term borrowings remained limited as the Company sufficiently managed its inventory, avoiding a buildup resulting in lower working capital requirements. A trend different from much of its peers in the industry during the period under review. Capitalization levels remained within manageable limits, supported by limited debt reliance and proceeds from a rights issue.

Going forward, ratings remain sensitive to recovery in margins and coverage indicators. Continued maintenance of a conservative capital structure and adequate liquidity will be important for the assigned ratings.

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
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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .