PACRA maintains the Entity Ratings of Mirpurkhas Sugar Mills Limited

The ratings reflect Mirpurkhas Sugar Mills Ltd.'s ('MSML' or 'the Company') established standing in the market and its strong affiliation with the Ghulam Faruque Group (GFG). This association provides MSML with significant financial backing, professional management, and a robust governance framework. The ratings take into account the Company’s diversified revenue sources across sugar, paper & board, and by-products, along with its strategic investment in Unicol Limited, a joint venture that continues to support earnings diversification despite recent performance volatility in the ethanol sector.
During MY25, the Company achieved a topline of PKR 12,616mln (MY24: PKR 11,970mln). The Sugar Division remains the primary growth driver, contributing 63% of total turnover and maintaining profitability with a PAT of PKR 620mln. A significant shift in market dynamics was observed as export revenue surged to PKR 1,051mln (MY24: PKR 174mln). However, the Paper & Board Division continues to face severe financial distress, reporting a net loss of PKR 871mln. This segment has been adversely impacted by intensified competition and the escalating cost of Old Corrugated Cartons (OCC), which have significantly compressed margins. A critical turnaround catalyst is the ongoing installation of the agro pulping plant, with completion now anticipated by April 2026. This strategic project is designed to eliminate reliance on expensive imported OCC, thereby reducing material costs and restoring gross profit margins that can translate into bottom-line profitability. MSML’s financial profile showed signs of resilience in MY25, with the working capital cycle narrowing to 86 days (MY24: 92 days) and FCFO improving significantly to PKR 1,069mln (MY24: PKR 494mln). Additionally, lower finance costs during the period provided some relief to cash flows. Despite these improvements, the capital structure remains highly leveraged with a debt-to-equity ratio of 76.9% (MY24: 78.1%). Consequently, although the Company has shown signs of recovery, it has yet to fully emerge from financial distress, as reflected in the continuation of the Rating Watch. The governance framework remains a core strength, characterized by an experienced board that provides clear strategic direction. The ratings are contingent upon the Company’s ability to effectively manage its financial obligations amid sectoral volatility, while maintaining operational stability across its core business segments.
The ratings are sensitive to the successful commissioning of the agro pulp plant, which is expected to reduce reliance on imported raw material. Sustained positive momentum in the sugar segment, along with prudent debt management and improvement in coverage ratios, remains essential.

About the Entity
Mirpurkhas Sugar Mills Limited, incorporated in 1964, is a public limited company, listed on stock exchange. Principal activity of the Company is manufacturing and selling of sugar and paper. The Company has a crushing capacity of 12,500 TCD with its mill located in Mirpurkhas, Sindh. Also, the company's paper and board business segment has the production capacity of 250 tons per day. Major shareholding lies with the Ghulam Faruque Group through Faruque Pvt. Limited and its associated companies (49.28%), Sponsors of the Company (0.87%), Banks, DFIs, NBFIs and others (9.37%), Insurance Companies (1.79%), Modarabas (8.09%) and General Public (30.6%).