November 6, 2018 (MLN): Pakistan Credit rating Agency (PACRA) has maintained the entity ratings of Al-Abbas Sugar Mills Limited at ‘A’ for long term and ‘A1’ for short term, with a ‘positive’ outlook forecast.
As per official statement form PACRA, the ratings reflect the Company's diversified revenue stream – sugar, ethanol and storage tanks– enabling it to cope up with the volatility in sugar prices.
“Margins in sugar have been depressed lately due to surplus sugar stock in the industry. However, despite volatile market conditions, the Company has been able to post solid margins owing to improved sucrose recovery and better ethanol margins,” said PACRA.
Ratings draw strength from the Company’s strong financial profile characterized by a modestly leveraged capital structure, strong coverages and efficient management of working capital, stated the agency.
Meanwhile, the positive outlook signifies the Company’s consistent performance and resilience to adverse movements in sugar industry.
“The ratings are dependent on the Company's ability to sustain its margins and healthy coverages while maintaining discipline in working capital management. Deterioration of relationship between shareholders leading to adverse impact on the Company's profile and/or performance would have a negative impact on ratings,” they added.
Al-Abbas Sugar Mills Limited was incorporated in May 1991 and is listed on Pakistan Stock Exchange. The company has diversified businesses of sugar, ethanol and storage tank terminal.
