PACRA Assigns Initial Entity Ratings to Mehran Sugar Mills Limited

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PACRA Assigns Initial Entity Ratings to Mehran Sugar Mills Limited

December 3, 2018

Lahore, December 03, 2018 (PPI-OT): The Ratings reflect Mehran Sugar’s strong business profile emanating from consistently high recovery rates (one of the highest in the country), diversified revenue stream and robust governance framework. To cushion against seasonality inherent in sugar industry, the bottom-line is supported through the Company’s strategic joint venture investment in ‘Unicol Limited’, an ethanol production company, and sale of electricity generation. Of late, the Company has made investments in FMCG sector in similar joint venture ‘UniFoods Industries Limited’ and investments in the energy sector.

Income from said projects are not expected anytime soon. Meanwhile, Mehran Sugar’s financial risk profile is characterized by moderately leveraged capital structure and relatively weak coverages. The Ratings draw comfort from Mehran Sugar’s ability to maintain healthy margins despite volatility in the sugar industry and a sizeable liquid investment portfolio.

The Ratings are dependent on the Company’s ability to improve its cashflows and coverages while maintaining strict financial discipline, especially in it’s working capital. Any significant deterioration in margins/ coverages would have 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

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Home » Business News, General Business News

PACRA Assigns Initial Entity Ratings to Mehran Sugar Mills Limited

December 3, 2018

Lahore, December 03, 2018 (PPI-OT): The Ratings reflect Mehran Sugar’s strong business profile emanating from consistently high recovery rates (one of the highest in the country), diversified revenue stream and robust governance framework. To cushion against seasonality inherent in sugar industry, the bottom-line is supported through the Company’s strategic joint venture investment in ‘Unicol Limited’, an ethanol production company, and sale of electricity generation. Of late, the Company has made investments in FMCG sector in similar joint venture ‘UniFoods Industries Limited’ and investments in the energy sector.

Income from said projects are not expected anytime soon. Meanwhile, Mehran Sugar’s financial risk profile is characterized by moderately leveraged capital structure and relatively weak coverages. The Ratings draw comfort from Mehran Sugar’s ability to maintain healthy margins despite volatility in the sugar industry and a sizeable liquid investment portfolio.

The Ratings are dependent on the Company’s ability to improve its cashflows and coverages while maintaining strict financial discipline, especially in it’s working capital. Any significant deterioration in margins/ coverages would have 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

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