Press Release

JCR-VIS Upgrades Ratings of Deharki Sugar Mills (Pvt.) Limited

Karachi, April 13, 2017: JCR-VIS Credit Rating Company Limited has upgraded the entity ratings of Deharki Sugar Mills (Private) Limited (DSML) to ‘A/A-2’ (Single A /A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 08, 2016.

Ratings assigned to DSML take into account its association with JDW Sugar Mills Limited (JDWSML), the largest sugar manufacturing company in the country. Being a wholly owned subsidiary of JDWSML, the company draws various benefits from its parent including operational integration. Moreover, borrowings of DSML are backed by corporate guarantee of JDWSL and personal guarantee of one director of the parent. Improved sugar prices and higher production volumes has benefited the company in terms of increased sales and gross margins providing impetus to the profitability and cashflows.

During crushing season 2016-17, DSML’S crushing and production is higher than previous crushing seasons. While the recovery rates declined during the outgoing crushing season, overall sugar production increased by around 28% on account of comparatively higher availability of sugarcane. The company plans to undertake BMR for plant efficiency.

Capital structure of the company witnessed improvement on account of retention of profits translating into decline in debt leverage and gearing indicators. Long term debt represented around 43% of total borrowings while remaining borrowing pertains to working capital requirement with varying outstanding levels during the year. Given current debt levels, cash coverages are expected to remain adequate.

Various functions are shared between JDWSML and DSML including information technology, audit and finance. In addition to this, senior management team of JDWSML also manages DSML operations.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).

Javed Callea

JCR-VIS Entity Rating Criteria Industrial Corporate (May, 2016)

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 2017 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