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PACRA Assigns Initial Entity Ratings to SGM Sugar Mills Limited

December 31, 2018

Lahore, December 31, 2018 (PPI-OT): The ratings draw comfort from strong acumen and support of new sponsors and management in the sugar industry. SGM Sugar is located in Sindh with a crushing capacity of 8000TCD and is recently acquired by ‘United Group’ of Essarani family. The family has long standing experience in agriculture sector and commodity trading including trading in fertilizer and coal, operating a sugar mill (Sindh Abadgar’s Sugar Mills Limited) and ethanol distillery.

Given the size of mill and steps taken by new management, a turn around in operations is expected. The financial risk profile is characterized as highly leveraged owing to loans obtained to re-profile the existing debt and a thin equity base. The Company’s coverages are in a distressed situation for the period. However, planned activity for current crushing season and Sponsors’ commitment to provide financial support provides cushion for the Company.

The ratings are dependent upon increasing capacity utilization level and achieving the operational efficiency envisaged by the management. Any further deterioration in margins and/or cashflows will negatively impact the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425

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