PACRA Assigns Initial Entity Ratings to Mehran Sugar Mills Ltd

December 04, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has assigned initial entity ratings to Mehran Sugar Mills Limited at ‘A-’ for Long Term and A2 for Short Term, with a stable outlook forecast.

According to the credit rating agency, the ratings reflect Meharan Sugar's strong business profile emanating from consistently high recovery rates (one of the highest in the country), diversified revenue stream and robust governance framework.

To cushion against seasonality inherent in sugar industry, the bottom-line is supported through the Company's strategic joint venture investment in ‘Unicol Limited’, an ethanol production company, and sale of electricity generation.

Of late, the Company has made investments in FMCG sector in similar joint venture ‘UniFoods Industries Limited’ and investments in the energy sector. Income from said projects are not expected anytime soon.

The ratings are dependent on the Company’s ability to improve its cashflows and coverages while maintaining strict financial discipline, especially in its working capital. Any significant deterioration in margins/ coverages would have negative impact on ratings.

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