Press Release

VIS Reaffirms Entity Ratings of Sheikhoo Sugar Mills Limited

Karachi, November 7, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Sheikhoo Sugar Mills Limited (SSML) at ‘A-/A-2’ (Single A-Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Moreover, the risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamental and liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 16, 2018.

The ratings assigned to SSML take into account moderate business profile of the company, largely underpinned by ample experience of sponsors led management in the sugar sector, sizeable crushing operations and long-standing strong business relationships with institutional customers. In addition, the company’s recent efforts towards creation of multifold revenue streams through establishment of steel billet manufacturing plant is expected to result in improved profitability of the company coupled with assistance in withstanding the impact of cyclical slumps in sugar prices. The ratings also derive strength from sound financial risk profile as depicted by growth in revenues, sustained profit margins and adequate debt coverage. During the outgoing year, the sponsors injected additional equity to support the capitalization indicators of the company. Going forward, further equity injection is also planned. However, the ratings remain constrained on account of cyclicality inherent in the sugar sector which may impact the business risk profile of the company from time to time. Ratings remain dependent upon sustenance of margins, profitability and capitalization indicators, going forward.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Ms. Maham Qasim at 042-35723411-13.

Javed Callea

Applicable rating criterion: Corporates (May 2019)

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 .

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