PACRA Maintains Entity Ratings of Sindh Abadgars Sugar Mills Limited

The ratings of Sindh Abadgars Sugar Mills Limited (SASML) reflects its presence in the sugar industry and supported by its strategic affiliation with the well-established DM United Group, which provides strategic guidance, and sector expertise. Operationally, the company faced a challenging year (MY2025) as limited sugarcane availability led to a reduction in net crushing days and overall throughput, subsequently lowering sugar production volumes. However, SASML demonstrated financial resilience; despite the volume dip, total revenue grew by 7.5% driven by improved average selling prices coupled with increasing export volumes, which rose to 12% of the sales mix. This topline growth, combined with competitive sugarcane procurement costs, bolstered gross margins. Furthermore, a significant reduction in finance costs, stemming from both a declining policy rate and optimized credit line utilization served as a primary catalyst for a bottom-line turnaround, shifting the net margin from a negative 5.1% in the previous year to a positive 2.3% reflecting in the "Positive Outlook". Furthermore, Capital structure also showed positive movement as leveraging declined to 34.2% from 41.2%. Looking ahead, the operating environment remains challenging. Competitive raw material cost pressures could constrain margins, cash flow generation, and liquidity. Governance and management continue to be critical strengths for the Company. Anchored by the Essarani family’s strategic oversight, the leadership team leverages decades of expertise to steer the Company through evolving industry dynamics.
The ratings are dependent on the Company’s ability to maintain healthy operating margins and disciplined working capital management. Going forward, any material changes in operating margins, working capital discipline, leveraging, or coverage metrics and market positioning are likely to be reflected in the ratings.

About the Entity
Sindh Abadgars Sugar Mills Limited, incorporated in 1984, is a public listed company engaged in the manufacture and sale of sugar and its by-products. Originally owned by the Effendi Group, majority control was acquired by the Essarani Family in 2005, who now hold about 79% of the shares. Other key shareholders include the Islamic Development Bank (~9%) and Financial Institutions (~2.4%), with the balance held by the public. The Company is led by CEO Dr. Tara Chand.