PACRA Maintains Entity Ratings of Jauharabad Sugar Mills (Pvt.) Limited

The assigned ratings reflect Jauharabad Sugar Mills Limited’s (JSML) established position in Pakistan’s sugar sector and the notable improvement in its financial risk profile during MY25. The "Positive" outlook revision underscores the company’s strengthened margins, enhanced profitability, and a robust improvement in key debt coverage indicators. This upward trajectory is driven by management’s unwavering focus on operational efficiency and cost optimization, further bolstered by the deep business acumen and strategic oversight provided by the company’s sponsors. By aligning disciplined financial management with long-term growth objectives, the organization continues to solidify its market position and credit profile. While the sugar industry remains exposed to cyclical production patterns and raw material price volatility, JSML has demonstrated resilience. Despite a sector-wide contraction in sugar production from 6.5MT to 5.8MT (-10.7%), JSML limited its production decline to a marginal 2.8%, effectively neutralizing broader market volatility and demonstrating a strengthened risk absorption capacity.
The Company operates a sugarcane crushing capacity of 9,500 TCD, with its primary unit producing 63,028 MT of sugar in MY25. Notably, sugar recovery improved to 10.10% (MY24: 9.86%), reflecting enhanced milling efficiency. From a financial perspective, JSML achieved a milestone in revenue growth, with the topline increasing to PKR 10,727mln (MY24: PKR 7,996mln), driven by higher domestic prices and a strategic expansion into export markets. Profitability indicators showed an upward movement; gross profit margins reached 13.8% (MY24: 12.6%) and operating margins rose to 10.8% (MY24: 9.3%). Net income surged to PKR 250mln (MY24: PKR 2mln), primarily due to a 31.5% reduction in finance costs. The Company’s liquidity profile also strengthened, as evidenced by a narrowed working capital cycle of 79 days (MY24: 88 days) and an increase in FCFO to PKR 1,349mln (MY24: PKR 1,054mln). With a debt-to-equity ratio improving to ~31.5% (MY24: ~33.9%), and a growing equity base of PKR 9,323mln, the Company is well-positioned for sustained financial stability.
Going forward, the Company’s performance is expected to remain stable, supported by consistent domestic demand for sugar, and improved profitability. The ratings are dependent upon the management’s ability to sustain margins, improve performance while maintaining the debt profile.

About the Entity
Jauharabad Sugar Mills Limited “the Company” (formerly known as Kohinoor Sugar Mills Limited), incorporated in 1968, is listed on Pakistan Stock Exchange since 1973. The Company was acquired from Saigol Group in Oct-13 by Cane Processing (Pvt.) Limited. Lately, the Company has increased its operational crushing unit, to 9,500 TCD. The Company is engaged in the manufacturing and sale of refined sugar and its by-products; molasses and bagasse. Jauharabad is majorly owned by a Holding Company - Cane Processing (Pvt.) Limited (~64%) -and individuals of Latif family (~9%). While the Company has a free float of ~34%. The Company's Board is Chaired by Mr. M. Aamir Beg. The production plant is located at Industrial Area Jauharabad City District Khushab in the province of Punjab.