Press Release

VIS Assigns Initial Ratings to Alliance Sugar Mills (Private) Limited

Karachi, January 20, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (A Minus/A-Two) to Alliance Sugar Mills (Private) Limited (ASML). The medium to long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’.

ASML is a wholly owned subsidiary of RYK Mills Limited (RYK) and is strategically located in Tehsil Ubarau of District Ghotki, Sindh, where sucrose content is high. ASML is primarily involved in manufacturing and sale of white crystalline sugar and its byproducts. The company has gradually enhanced its crushing capacity, which is currently over 14,000 tpd.

The ratings draw comfort from the stable operations of the company during the last two years. The company has registered increase in net sales mainly on account of higher volumetric sales resulting from capacity expansions and some improvement in selling price during FY19. The ratings also factor in steady improvement in sucrose recovery rate in the last three years owing to provision of support to farmers and continued capex in energy efficiencies. The company’s capacity to meet its financial obligations is considered adequate, as depicted by increasing funds from operations generation and steady improvement in the debt service coverage ratio. Given higher volumetric sales, the overall debt burden has moderated on account of considerable reduction in short-term borrowings, partially offset by slightly higher long-term debt. Resultantly, the relatively elevated gearing and debt leverage ratios stood lower at end-FY19. While the business risk profile is currently undiversified, the management intends to establish bagasse-based co-generation power plant and industrial ethanol manufacturing project, which are in planning phase. The ratings are dependent on sustained profitability, further improvement in cash flows generation, and maintenance of leverage indicators at prudent levels.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 201) or email at

Javed Callea

VIS Entity Rating Criteria 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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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