Press Release

VIS Reaffirms Ratings of Madina Sugar Mills Limited

Karachi, July 24, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Madina Sugar Mills Limited (MSML) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on June 29, 2018.

The ratings assigned to MSML take into account its association with Madinah Group, having business interests in various sectors including edible oils, sugar, ethanol, power generation, mass media and steel. The assigned ratings take into account positive momentum in sales and enhanced diversification in ethanol business to curtail the cyclicality in sugar sector. Further, the ratings derive strength from positive impetus in profitability, sound coverages and adequate liquidity profile. The ratings also incorporate minimal reliance of the company on long-term financing, therefore gearing and leverage indicators have remained at comfortable levels, supported by growth in equity. However, the ratings remained constrained with significant stock of sugar and its price sensitivity, coupled with the inherent volatility of business risk in the sugar sector. Management of leverage and liquidity indicators along with additional contribution margins from the ethanol segment would be important, going forward.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.


Javed Callea
Advisor

Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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