VIS Reaffirms Entity Ratings of Fatima Sugar Mills Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- November 17, 2020 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Fatima Sugar Mills Limited (FSML) at 'A-/A-2' (Single A Minus/A-Two). The medium to long-term rating of 'A-' denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of 'A-2' denotes good certainty of timely repayment, sound liquidity factors and good company's fundamentals. Outlook on the assigned ratings is 'Stable'. The previous rating action was announced on February 12, 2020.

FSML is a part of 'Fatima Group', a large conglomerate operating in the country, having business interests in fertilizer, textile, energy, sugar, and commodities trading sectors. FSML is mid-sized sugar mill with overall crushing capacity of 11,500 tons per day while its electricity requirement is met through in-house bagasse-based power unit. The company sells refined sugar both in the local and international markets, though proportion of local sales has increased significantly during 9MFY20.

Growth in net revenue and higher margins were largely a function of higher selling prices of sugar and molasses in the local market. The company also reported higher profits for the period as the impact of decrease in sucrose recovery rate and increase in sugarcane support price was more than offset by higher sugar price. Funds from Operations (FFO) increased in line with higher profitability that resulted in slight improvement in the debt service...