Press Release

VIS Assigns Initial Entity Ratings to Fatima Sugar Mills Limited

Karachi, February 12, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Fatima Sugar Mills Limited (FSML). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. Outlook on the assigned ratings is ‘Stable’.

The ratings incorporate FSML’s association with Fatima Group (FG), one of the large industrial conglomerates operating in country. FSML is wholly owned by Fatima Holding Limited (FHL), which acts as the holding company of FG. The shareholding of FHL is owned by sponsoring family with three brothers and their families each having one third shareholdings in the company. FG is engaged in the manufacturing and production of fertilizer, textile, energy, sugar & trading of commodities. FSML is mid-sized sugar mill with overall crushing capacity of 12,000 tons per day while its electricity requirement is met through in-house bagasse based power unit.

The ratings assigned to FSML take into account its moderate business risk profile emanating from inherent cyclicality & price vulnerability in sugar sector dynamics. The company sells refined sugar both in the local and international markets with major portion of sugar sales derived from export sales during last couple of years. While sales decreased on account of lower sugar production, the upward trend in sugar, molasses & bagasse prices along with increase in sucrose recovery rate positively impacted margins and bottom line in FY19. Given higher cash flows, coverages have improved. Moreover, with lower working capital requirements, short-term borrowings declined, leading to decrease in leverage indicators at end-FY19. The company has proposed BMR to be carried out in the next two years which is planned to be financed through a mix of long term loan and internal cash flows. The management anticipates gearing to remain at similar levels with repayment of existing borrowings along with expected improvement in equity on the back of profit retention. The ratings would remain sensitive to maintenance of gearing and coverages at an adequate level.

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

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

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