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Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Fatima Sugar Mills Limited at ‘A-/A2’. These ratings suggest that the company maintains good credit quality, with adequate protection factors. The medium to long-term rating of ‘A-‘ indicates the ability to withstand economic changes, while the short-term rating of ‘A2’ reflects the company’s capacity to meet its short-term obligations.
Fatima Sugar Mills Limited, a public limited unlisted company, began its operations on December 1, 1993. The company manufactures white refined sugar at its production facility in Kot Addu, Muzaffargarh, with a daily crushing capacity of 20,000 metric tons. With its registered office in Lahore and head office in Multan, FSML is part of the broader Fatima Group, which has interests spanning fertilizer, textile, energy, and commodities trading.
The ratings take into account the inherent risks of Pakistan’s sugar sector, which is influenced by seasonal production cycles, regulatory changes, and pricing volatility. The removal of the government-mandated minimum support price for sugarcane from the 2024-25 season could affect supply dynamics.
Despite these challenges, FSML maintained healthy profit margins in FY24, effectively managing sales from previous year’s carryover stock and keeping financial costs in check. The company’s ability to cover its debt servicing requirements remains intact.
The outlook on the ratings is ‘Stable’, but the impact of changes in sugarcane procurement costs will be closely monitored in the future.