JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial medium to long term entity rating of BBB+ (Triple B Plus) and short term entity rating of A-2 (A Two) to Al-Noor Sugar Mills Ltd (ASML). The outlook on the medium to long term rating is 'Stable',
The assigned ratings take into account the considerable diversification arising in the revenue stream of the company from the gradual strengthening of the medium density fibre board (MDFB) division over time. Commonly marketed under the Lasani brand, this product is now largely based upon wood as the major raw material which has de-linked the raw material supply dynamics horn that of the sugar industry.
This diversification is providing support to the considerably cyclical and seasonal nature of sugar operations, the latter consideration implying the need to commit considerable financial resources to accumulate inventory during the sugarcane crushing season for gradual sell-off of' sugar during the year which also gives rise to price risk with low pricing power with the producers.
The management now targets expansion as well as value-addition mainly in the MDFB division, which hung modular in nature, does not necessarily entail major financial.-PR