The Pakistan Credit Rating Agency Limited
Press Release


Adnan Dilawar

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PACRA Assigns Positive Outlook to Ratings of Al-Abbas Sugar Mills Limited

Rating Type Entity
(06-Nov-18 )
(09-May-18 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Positive Stable
Rating Watch - -

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. Well thought investment in storage terminal tank terminals provides an additional cushion to cashflows throughout the year. 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. 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.

About the Entity
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. The business include a) Sugar capacity of 7,500 M. tons per day, b) Ethanol-capacity 172,500 liters per day, and c) Storage tank terminal-capacity of 22,850 M. tons per month. It operates in two different locations at Mirpurkhas and Dhabeji in Sindh. 58% of Al-Abbas Sugar's shareholding lies with Haji Ghani Group, which enjoys strong presence on the board and management control. Jahangir Siddiqui (JS) group (27%) is the other major shareholder. Mr. Asim Ghani is the Chief Executive Officer of the Company.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.