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The Pakistan Credit Rating Agency (Pacra) has assigned 'A-' (Single A minus) rating to the proposed privately placed secured TFC issue of Rs 1,200 million by Shakarganj Mills Limited (SML). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The rating reflects relatively high business risk of SML operations, an outcome of cyclical nature of sugar industry. Nevertheless, the rating recognises the management's ongoing efforts to reduce interdependency of various business segments - sugar, ethanol, and particleboard - to acid stability to its core revenues, in turn, cash flows.
Meanwhile, the Shakarganj Mills Limited has a relatively strained capital structure - indeed improving - engendering high, albeit manageable, financial risk.-PR

Copyright Business Recorder, 2008

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