Press Release

JCR-VIS Reaffirms Ratings of JDW Sugar Mills Ltd.

Karachi, August 24, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of JDW Sugar Mills Limited (JDW) at ‘A-/A-2’ (Single A Minus / A-Two) and rating of the company’s Rs. 1.7b TFC issue at ‘A’ (Single A). Outlook on the assigned ratings is ‘Stable’.

With continued cyclical downturn in supply of sugarcane for the second consecutive year, the sugar sector in general has been faced with higher production costs and compressed margins. JDW has been able to post healthy earnings for the on-going year, despite lower production volume and margins for the sugar division. Margins of JDW received impetus from the sale of molasses, while sucrose recovery rate also remains strong relative to other industry participants.

After having peaked during the crushing season, outstanding debt levels have started to adjust downwards, in line with the sale of stock. Carryover stock of the current season is expected to be very low. The company has announced a rights issue recently, almost two-thirds of which will be met through sponsor loan conversion. The company has made strategic investments in a pulp mill and a dairy company over the last year. JDW has also extended letter of support in favor of an associated concern and risk profile of same would be monitored for possible draw down of this support. Earning stream from these investments may require some time to develop. Over the long term, these strategic investments are expected to enable the company to mitigate the risks associated with the sugar sector.

The merger process of Ghotki Sugar Mills Private Limited, a wholly owned subsidiary, with JDW has been initiated. The combined crushing capacity of these units is 37,000 TCD, representing almost 9% market share.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool (Ext: 506) at 35311861-70 (10 lines) or fax to 35311873.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2010 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited