PACRA assigns Initial Entity Ratings to Popular Sugar Mills Limited : AsiaNet-Pakistan

PACRA assigns Initial Entity Ratings to Popular Sugar Mills Limited

May 2, 2018 | General Business News | Share:

Lahore, May 02, 2018 (PPI-OT): The ratings reflect the adequate business profile of Popular Sugar drawing strength from it’s Group, Popular Group of Industries, and strong business acumen of it’s sponsors. Popular Group roots trace back to 1971 when (Late) Mr. Haji Roshan Din set-up a match unit. Over the years the Group has expanded into diversified businesses through organic growth and acquisition. Today, Popular Group is dominated by manufacturing business which includes fruit juices, sugar, match, packaging, cement and textile. It also includes a Modarba and Security Company.

Popular Sugar’s ability to maintain reasonable margins despite volatility in the sugar industry gives comfort to the ratings. Lately, the company has increased it’s production capacity which should augment growth. Trade terms established by the management compliment it’s working capital cycle which is otherwise dominated by finished goods inventory. This is mainly financed through bank borrowings. The company’s debt mix is dominated by short-term borrowings. This is due to a sizeable capital expenditure in recent years, wherein needed funds were directed from short-term borrowings. The company is cognizant of these factors and plans to obtain long-term finance to ease the improve the situation. Meanwhile, coverage remain stressed.

The ratings are dependent upon the company ability to demonstrate an upwards trajectory in it’s turnover and maintaining reasonable margins. Strengthening the company’s governance framework and exercising strict financial discipline, debt mix and coverages should bode well.

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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Category: General Business News