Lahore, May 08, 2019 (PPI-OT): The ratings reflect the Company’s diversified revenue stream, emanating from sugar, ethanol and storage facilities, mitigating volatility risk associated with the sugar industry. Margins in the industry have been depressed lately due to a persistent supply glut and substantial carry over stock. Sugar prices have been improving recently, providing relief to a certain extent. However, despite volatile market conditions, the Company has been able to sustain healthy margins owing to efficient operations and diversification.
Well thought investment in storage tank terminals provides an additional cushion to cashflows throughout the year. Ratings draw strength from the Company’s robust governance framework and strong financial profile represented by a modestly leveraged capital structure, strong coverages and efficient management of working capital. The upgrade signifies the Company’s consistent performance and resilience to adverse movements in the sugar industry.
The ratings are dependent on the Company’s ability to sustain its margins and healthy coverages while maintaining necessary cushion and discipline in working capital management. Significant deterioration of relationship between shareholders leading to adverse impact on the Company’s profile and/or excessive borrowings resulting in declining coverages will have a negative impact on ratings.
For more information, contact:
Analyst
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
Email: hammad.rashid@pacra.com
Web: www.pacra.com