VIS reaffirms ratings of Al-Noor Sugar Mills

KARACHI: VIS Credit Rating Company Limited has reaffirmed entity ratings of Al-Noor Sugar Mills Limited (ASML) at A Minus/ A-Two). The outlook on the assigned ratings is stable.

The previous rating action was announced on November 30, 2017, said a press release on Thursday.

The reaffirmation of ratings incorporate projected improvement in financial profile due to enhanced profitability from the medium-density fibre board segment and turnaround in the sugar segment on the back of improved recovery ratio and increase in sugar prices.

Projected improvement in cash flows and inflows from subsidy receivable on sugar exports are projected to be utilized for repayment of outstanding debt translating into improvement in leverage indicators. Achievement of the same is considered important from a ratings perspective.

The ratings are constrained by high business risk given weak sugar sector dynamics and corresponding weakening in financial profile. The company has been incurring losses for the last two years while decline in equity base along with higher borrowings has resulted in elevated leverage indicators.

However, projected cash flows are expected to remain sufficient to meet outstanding long-term debt. The ratings remain dependent on reducing leverage indicators vis-a-vis current levels and maintaining sound debt servicing ability as projected by the management.