Ratings of Al-Noor Sugar Mills Limited reaffirmed

Karachi, August 27, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Al-Noor Sugar Mills Limited (ASML) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the outstanding ratings is ‘Stable’.

Ratings take into account the diversified operations of the company, through two operating divisions, sugar and medium density fibre board (MDFB). With excess sugar production, the market price of the commodity remained under pressure, resulting in lower margins. Demand for MDFB is considered to be stable; however given the recent price trend, results of the division may also not be able to provide the desired contribution to the bottom line.

Debt levels of the company have been rising for the last two years. In addition to higher short term borrowings to meet working capital requirements, the company has also mobilized additional long term debt. Short term debt is adequately covered by stock.

In the absence of price increase going forward, inventory carrying costs may however adversely affect profitability while debt servicing coverage may also come under some stress as the cushion available against long term debt is limited.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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