Lahore, March 31, 2016 (PPI-OT):The Pakistan Credit Rating Agency (PACRA) has maintained the long term and short term entity ratings of Al-Abbas Sugar Mills Limited (AASML) at ‘A’ (Single A) and ‘A1′(A One) respectively. The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The ratings reflect AASML’s significant positioning in its core business segments – sugar and ethanol. While sugar is characterized by stable demand supported by fundamentals, ethanol takes benefit of the value addition that it signifies as a product. Although margins are thin in sugar due to structure of domestic industry and softening of commodities in international markets, revenues of ethanol division support profitability.
With full repayment of long term debt; the company’s financial profile is in strength. The company’s financial profile becomes stretched during crushing season, owing to working capital related sizable borrowings. Nevertheless, adequate cash flows and largely stable coverages provide relief to it. The ratings continue to take support from the company’s seasoned management team, having sound understanding of the industry dynamics. AASML also has built storage terminal at Kemari port; this provides stable rental income.
The company owns a small power plant for which it is negotiating power purchase agreement with K-Electric. This should add another stable revenue stream. The ratings are dependent on the sustained risk profile of the company. Herein, business volumes and related margins are important. Deleveraging and addition of stable revenue streams are likely to positively impact the ratings.
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: Financial Services