Press Release

JCR-VIS Reaffirms Ratings of Al-Noor Sugar Mills Ltd at A-/A-2

Karachi, November 30, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Al Noor Sugar Mills Limited (ASML) at ‘A-/A-2’ (Single A Minus/ A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 27, 2016.

ASML was incorporated in 1969 as a public company. Production facilities of ASML include sugar and medium density fibre board (MDFB) manufacturing units. The company has a strong presence in the local market for MDFB products.

The assigned ratings are constrained by the demand supply imbalances in the sugar market, locally and internationally. Given this scenario, the ratings derive strength from the demonstrated financial support by sponsor which JCR-VIS expects to continue, if required.

Ample availability of raw material during the period led to higher crushing volume of sugarcane in FY17 with an increase in capacity utilization. However, due to supply glut in the sugar sector, average local prices remain depressed over the year which kept sugar sales under pressure. Meanwhile, segment contribution of MDFB unit depicted an improvement on the back of higher sales volume. Owing to underperformance of the sugar segment, financial profile has weakened on a timeline basis. On the other hand, MDFB division has undergone capacity expansion which is projected to result in improved cash flows during FY18. The performance of MDFB is expected to remain critical in the backdrop of projected subdued performance of sugar sector owing to demand supply imbalance.

The asset base of the company increased on the back of higher stock level amounting to Rs. 5.1b at end 9MFY17 which resulted in higher short term borrowings. As a result, debt leverage and gearing were reported higher by end-FY17. However, on account of higher sales in the first quarter of FY18, inventory levels, short term borrowings as well as leverage indicators are expected to decline.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 021-35311861-71 or fax to 021-35311872.

Jamal Abbas Zaidi

Applicable Rating Criteria: Industrial Corporates (May 2016)

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 2017 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