Press Release

JCR-VIS Reaffirms Entity Ratings of Shahmurad Sugar Mills Ltd. at BBB+/A-2

Karachi, November 25, 2013: 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 assigned ratings is ‘Stable’.

The local sugar industry continues to face challenges as prices in the domestic and international market have remained depressed for an extended time period. Prices of sugarcane are regulated by the Government of Pakistan and have depicted a rising trend while market prices of the processed commodity are expected to remain range bound over the foreseeable horizon on account of surplus sugar production.

With SSML processing refined sugar as well as ethanol as a by-product, assigned ratings draw comfort from the diversified cash-flow stream of the company. With improvement in recovery rate during the 2012/13 crushing season, performance of the sugar division improved during FY13. The company benefited from higher export sales while local sugar prices continued to face pressure due to excess production. Performance of distillery division however remained stressed during FY13 on account of considerable decline in the international ethanol prices. As a result, overall profitability of the company remained constrained during FY13.

Debt leverage of the company continues to remain high. While short term debt is covered by stock-in-trade and trade debts on the company’s books, cash flows of the company remain under pressure with respect to repayment of long term loans. SSML plans to extend the maturity profile of its long term debt to ease pressure on debt servicing coverage.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 (10 lines) or fax to 021-35311873.

Jamal Abbas Zaidi
Deputy 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 2013 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