Press Release

JCR-VIS Assigns BBB+ Entity Rating to Al-Noor Sugar Mills Ltd.

Karachi, November 29, 2007: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial medium to long term entity rating of BBB+ (Triple B Plus) and short-term entity rating of A-2 (A Two) to Al-Noor Sugar Mills Ltd. (ASML). The outlook on the medium to long term rating is ‘Stable’.

The assigned ratings take into account the considerable diversification arising in the revenue stream of the company from the gradual strengthening of the medium density fibre board (MDFB) division over time. Commonly marketed under the ‘Lasani’ brand, this product is now largely based upon wood as the major raw material which has de-linked the raw material supply dynamics from that of the sugar industry. This diversification is providing support to the considerably cyclical and seasonal nature of sugar operations, the latter consideration implying the need to commit considerable financial resources to accumulate inventory during the sugarcane crushing season for gradual sell-off of sugar during the year which also gives rise to price risk with low pricing power with the producers. We understand that the management now targets expansion as well as value-addition mainly in the MDFB division, which being modular in nature, does not necessarily entail major financial commitments. Meanwhile, the excess bagasse produced at the sugar division is available for power generation leading to cost savings in that area.

The company has pre-paid the two TFC issues, rated A- by JCR-VIS and accordingly the ratings are being withdrawn. We are of the opinion that the company’s plan to restructure and re-profile the outstanding debt at lower cost of borrowing will provide resilience to the company’s capital structure. Going forward, accumulation of liquid resources on the balance sheet would provide comfort to mitigate any cash flow stress on the MDFB division during an economic cycle impacting demand for the product.

We have noted the company’s progress towards setting up stronger control environment internally including strengthening of the MIS for improved information flow. Strengthening of the internal audit function would be a critical element in this regard to be pursued by the management.

For further information on this rating announcement, please contact Mr. Safdar Kazi ( or Ms. Sadaf Aliuddin ( at 5311861 (10 lines) or fax to 5311873.

Faheem Ahmad
President & CEO

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 2007 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited