Lahore, October 31, 2018 (PPI-OT): Pakistan is the 6th largest sugarcane producer, 9th largest sugar producer and 8th largest sugar consuming country in the world. Sugarcane is grown on approximately 1.2mln hectares. The industry witnessed surplus sugar production during FY17, which resulted in depressed prices and a significant pile up of sugar stocks at end Sept-17. Sugar production decreased to 6.5mln tons during FY18 in comparison to 7mln tons in FY17. The over supply situation persisted in FY18 and prices remained under pressure.
The ratings reflects the adequate business profile of Popular Sugar Mills Limited. During FY18, the Company has managed to maintain its margins accompanied by an increase in turnover despite depressed sugar prices. The Company intends to improve its debt mix, which remains skewed towards short-term borrowings, by obtaining long term loans. The Company’s modest leveraging and improving core coverages provide comfort to it’s financial risk profile.
The ratings are dependent upon the Company’s ability to increase its revenue base while maintaining margins and strict financial discipline/coverages. Continued efforts to realign the debt mix are critical for ratings. Any material deterioration in coverages and/or margins will have negative rating implications.
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
Category: General Business News