VIS Reaffirms Entity Ratings of Sheikhoo Sugar Mills Limited

Karachi, November 07, 2019 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Sheikhoo Sugar Mills Limited (SSML) at ‘A-/A-2’ (Single A-Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Moreover, the risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamental and liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 16, 2018.

The ratings assigned to SSML take into account moderate business profile of the company, largely underpinned by ample experience of sponsors led management in the sugar sector, sizeable crushing operations and long-standing strong business relationships with institutional customers. In addition, the company’s recent efforts towards creation of multifold revenue streams through establishment of steel billet manufacturing plant is expected to result in improved profitability of the company coupled with assistance in withstanding the impact of cyclical slumps in sugar prices.

The ratings also derive strength from sound financial risk profile as depicted by growth in revenues, sustained profit margins and adequate debt coverage. During the outgoing year, the sponsors injected additional equity to support the capitalization indicators of the company. Going forward, further equity injection is also planned. However, the ratings remain constrained on account of cyclicality inherent in the sugar sector which may impact the business risk profile of the company from time to time. Ratings remain dependent upon sustenance of margins, profitability and capitalization indicators, going forward.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873

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