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

Karachi -- October 31, 2022 (PPI-OT)

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

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VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Faran Sugar Mills Ltd ('FSML' or 'the Company') at 'A-/A-2' (Single A minus/Single A-Two). The medium to long term rating of 'A-' signifies good credit quality with adequate protection factors. Risk factors are considered variable if changes occur in the economy. The short-term rating of 'A-2' depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Outlook on the assigned ratings is 'Negative'. Previous rating action was announced on August 11th, 2021.

The assigned ratings take into account satisfactory operating track record, and extensive experience of sponsors in the sugar sector. VIS classifies the business risk profile of Sugar sector as 'Medium', which incorporates high cyclicality medium competition, capital intensity and technology risk, low energy sensitivity and high regulatory risk.

Business risk profile of FSML is diversified, given additional revenues from ethanol sales through Unicol Limited, which are sizable. Given the sale of Uni Food Industries recently, which was a loss making entity, and better profitability metrics, the Company's cash flow coverage indicators have improved. Given the stress...