Press Release

VIS Reaffirms Ratings of Etihad Sugar Mills Limited

Karachi, November 19, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Etihad Sugar Mills Limited (ESML) at ‘A-/A-2’ (Single A Minus/A-Two). 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 payment coupled with sound company fundamentals and liquidity factors. The previous rating action was announced on January 10, 2020.

The ratings assigned to ESML take into account ample experience of sponsors in the sugar sector and sizeable crushing operations. Sponsors have also supported the company in the form of interest free loans. The ratings incorporate improvement in profit margins mainly on back of increase in retail prices of sugar. Liquidity profile remained largely intact supported by notable increase in FFO leading to improvement in debt service coverage. While gearing and debt leverage remained on higher side, the latter decreased during the review period on account of lower trade and other payables. The company has made investment in 74MW bagasse-based power project, Etihad Power Generation (Pvt.) Ltd., with a stake of 49%. Once operational, the power project is expected to support the operations and cost inputs of the entity. Meanwhile, the ratings remained constrained on account of high business risk emanating from inherent cyclicality in crop levels, raw material prices and any adverse changes in regulatory duties. Ratings will remain dependent upon maintenance of leverage indicators at lower than current levels, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) 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 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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