The Pakistan Credit Rating Agency (PACRA) has maintained the rating assigned to the secured TFC issue of Rs 200 million of Shahmurad Sugar Mills Limited (SSML) at 'BBB' (Triple B). The rating denotes a low expectation of credit risk and an adequate capacity for timely payment of financial commitments. The rating assigned to SSML's secured TFC recognises the company's highly leveraged capital structure and strained cash flows, despite improving margins. At the same time, the rating also takes into account the diversification achieved in the earning stream through commencement of distillery operations, rendering the company less vulnerable to unfavourable developments in the sugar sector.
Further, the sponsors demonstrated financial support in times of high liquidity requirement is also a critical rating factor.
SSML issued a secured TFC of PKR 200mln in FY02 of a 4-years tenor. It carries a floating rate of SBP Discount Rate plus 2.5 percent per annum with a cap of 17.5 percent and a floor of 15.5 percent. The profit is payable on a semi-annual basis, while the principal is to be redeemed in six semi-annual instalments commencing in November 03.
The TFC in issue is secured by a first ranking pari passu charge on fixed assets (excluding land) of the company. Currently three instalment of the principal payable in May 05, November 05 and May 06 are outstanding (total principal amount: Rs 100 million).
Incorporated in 1980, Shahmurad Sugar Mills Limited (SSML) is listed on the Karachi Stock Exchange. SSML operates from Jhok Sharif, District Thatta, in lower Sindh. SSML is a part of the Al Noor Group that has business interests in sugar, insurance and modaraba sectors and is also active in the trading of commodities.
The main sponsors of the Al Noor Group hold 41.3 percent shareholding of SSML. The nine-member Board of Directors includes seven family members and two nominees of the NIT.
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