The Pakistan Credit Rating Agency Limited
Press Release


Ayesha Qasim

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PACRA Maintains Entity Ratings of Noon Sugar Mills Limited

Rating Type Entity
(08-May-19 )
(12-Nov-18 )
Action Maintain Initial
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings reflect Noon Sugar Mills Limited’s diverse revenue stream, which in addition to the sale of sugar and ensuing by-products, is augmented by ethanol sales. The margins in the sugar industry have been depressed lately. However, the Company has displayed stability in margins through the support of distillery operations. The Company recently underwent capacity enhancement, expanding its distillery production capacity by 50,000 MT, with operations formally commencing in December, 2018. Going forward, the Company aims to focus on improving efficiency through BMR and utilization of recent capacity enhancement. Meanwhile, the Company’s financial profile is adequate, characterized through weak working capital management, adequate coverages and a leveraged capital structure.
The ratings are dependent on the management’s ability to reduce leveraging and improve working capital management, while maintaining profitability. Generating envisaged revenue and cashflows form distillery expansion is critical for ratings. Any deterioration in margins and/or coverages will have a negative impact.

About the Entity
Noon Sugar Mills was incorporated in 1964 as a public limited company, with its shares listed on the Pakistan Stock Exchange (PSX). The primary business of the Company is manufacturing and sale of white refined sugar and Ethanol. Noon Sugar has its registered office located on Sarwar Road, Cantt, whereas, the mill is located in Sargodha. The Company has the capacity to crush 9,000 tons of sugarcane and can produce 130,000 liters of ethanol per day.

Majority shareholding lies with the Noon Family through Mr. Mailk Adnan Hayat Noon (38%), his brother Mr. Salman Hayat Noon (20%), and associates (13%). Remaining shareholding is held by the general public. The Company is headed by Lt. Col. (R) Abdul Khaliq Khan, who is the Chief Executive Officer. He is ably supported by a professional management team. The seven-member board of directors has two independent directors and is chaired by Mr. K. Iqbal Talib.

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.