Press Release

JCR-VIS Reaffirms Ratings of Shahmurad Sugar Mills Ltd.

Karachi, October 19, 2011: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Shahmurad Sugar Mills Limited (SSML) at ‘BBB+/A-2’ (Triple B Plus/ A-Two). Outlook on the ratings is ‘Stable’.

Financial results of the sugar industry have generally continued to improve in FY11, emanating from higher sugar prices, despite increased supply both in domestic and international markets. Global surplus in sugar stocks has resulted in decline in international prices since beginning of CY11, however, domestic prices exhibited firmness with upward trend and have increased considerably during 3Q11 on the back of seasonal demand. SSML being one of the few diversified sugar units - producing sugar as well as ethanol - has also benefited from improved price trends of ethanol, in addition to those in sugar. The financial profile of the company improved on account of wider margins and significant growth in sales. Improved margins of ethanol division are also spurred by value addition through production of fuel grade ethanol. Though the company’s leverage remained high at the end of 3Q11, given the seasonal high demand for working capital, the self liquidating nature of inventory thus financed, provides comfort to ratings.

New sugar stocks are expected to start building up by end of November 2011; meanwhile the demand-supply situation is expected to remain manageable on the back of carryover stocks. The domestic price of sugar may therefore remain range bound in the short term. Operating cash flows are expected to improve in view of better crop yield expected in upcoming season. JCR-VIS will continue to monitor trends in this respect.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Mr. Manzoor H Memon, ChE (Ext: 512) at 021-35311861-70 or fax to 021-35311873.

Javed Callea

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 2011 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