Press Release

VIS Credit Rating Company Assigns Initial Ratings of Faran Sugar Mills Limited

Karachi, February 20, 2019: VIS Credit Rating Company Limited (VIS) has assigned the initial entity ratings to Faran Sugar Mills Limited (FSML) at ‘A-/A-2’ (A minus/A - Two). The long term rating signifies good credit quality with adequate protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.

Assigned ratings of FSML derive strength from its sponsor, Amin Bawany Group, an experienced business group of the country. Ratings reflect moderate financial and business risk profile along with adequate corporate governance framework.

Current ratings are constrained by inherent business risk present with volatility in sugar prices in particular and commodity prices in general. Depressed sugar prices in last few years have put pressure on sugar segment margins in the backdrop of regulated cane prices. However, bottom line of the company is also supported by revenues from its associates specifically from its ethanol unit. With anticipated growth in revenue from ethanol in view of currency depreciation, profits from the same will provide impetus to FSML’s profitability.

Leverage indicators of the company are considered adequate. Debt profile of the company largely comprises short term borrowing utilized to finance its working capital. Given that management has no plans for capital expenditure in the near future, leverage indicators are projected to remain sound. Ratings will be contingent on maintenance of sustainable performance metrics and adequate leverage indicators.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Ms. Muniba Khan (Ext: 215) or at 021-35311861-71 or fax to 021-35311872-3.

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited