PACRA Maintains Entity Ratings of Mehran Sugar Mills Limited : AsiaNet-Pakistan

PACRA Maintains Entity Ratings of Mehran Sugar Mills Limited

May 3, 2019 | General Business News | Share:

Lahore, May 03, 2019 (PPI-OT): The Ratings reflect Mehran Sugar’s strong business profile emanating from consistently high recovery rates (highest in the country in MY18), diversified revenue stream and robust governance framework. To mitigate risks associated with seasonality and volatility in the sugar industry, the Company’s profitability is supported through a strategic joint venture investment in ‘Unicol Limited’, an ethanol production company, and sale of electricity generation. Of late, the Company has made investments in the FMCG sector in a similar joint venture, ‘UniFoods Industries Limited’, and investments in the energy sector through its wholly-owned subsidiary, ‘Mehran Energy Limited’.

However, income from these avenues are not expected anytime soon. The Ratings draw comfort from Mehran Sugar’s ability to maintain healthy margins despite volatility in the sugar industry and a sizable liquid investment portfolio. The Company’s financial risk profile is characterized by a leveraged capital structure and adequate coverages and working capital management.

The Ratings are dependent on the Company’s ability to improve cashflows and coverages while maintaining strict financial discipline, with an increased emphasis on working capital management. Any significant deterioration in margins and/or 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

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Category: General Business News