Press Release

JCR-VIS Assigns Entity Ratings of ‘A-/A-2’ to Al-Noor Sugar Mills Ltd.

Karachi, February 10 2011: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial medium to long term entity rating of ‘A-’ (Single A Minus) and short-term rating of ‘A-2’ (A-Two) to Al-Noor Sugar Mills Limited (ASML). Outlook on the medium to long term rating is ‘Stable’.

The assigned ratings take into account the diversified operations of the company. ASML is currently operating with two divisions, sugar and medium density fiber board (MDFB), stabilizing the revenue stream by partially diversifying away the risk of cyclicality and seasonality stemming from the sugar processing division. The MDFB division also enjoys the larger share in the local market with only few competitors domestically. In addition to the recent increase in prices, the sugar division of the company has also been benefiting from the location of the sugar mill, which is situated in an area where sucrose recovery rates are better.

The performance of the MDFB division has lately been stressed on the back of increased cost and devaluation of local currency, translating into depressed margins. However, growth in quantity sold has resulted in increase in overall sales and profits. Likewise, the sugar industry in Pakistan has been faced with high production cost and squeezed margins during the last two years on account of continued cyclical downturn in the supply of sugarcane. ASML has however been able to improve its margins with somewhat better sucrose recovery rates and timely sale of sugar at relatively better prices. Despite expected increase in production during the current season, the continuing demand-supply deficit with low carry over stocks, is likely to keep the sugar prices strong during the ongoing year.

The rating also incorporates the improvement in bottom line and adequate cash flow coverage during the last two years as well as expected debt coverage in the absence of new major capital expenditure plans. With improved capitalization, gearing and leverage also improved. JCR-VIS will closely monitor price trends, being the major drivers of sustained performance in the industry.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 407) or Ms. Sabeen Saleem (Ext: 510) at 021-35311861-70 (10 lines) or fax to 021-35311873.

Faheem Ahmad
President & CEO

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2011 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited