PACRA Maintains Entity Ratings of Tandlianwala Sugar Mills Limited

The assigned ratings affirm Tandlianwala Sugar Mills Limited (TSML or “the Company") as a strong player in Pakistan’s sugar, ethanol, and CO2 sectors, leveraging an integrated operational model. The Company operates across three primary business segments— sugar, ethanol, and CO2—contributing ~83.4%, 15.8% and ~0.8% to total revenue, respectively. The Company is exposed to market risks, primarily stemming from fluctuations in sugarcane yield and quality, which are influenced by agronomic conditions and cyclical variations in crop production. Additionally, volatility in raw material prices, heightens operational uncertainty, necessitating robust supply chain and cost controls. Global ethanol prices have remained suppressed amid macroeconomic uncertainty, exerting downward pressure on the Company’s profitability. With the government's shift to deregulated pricing of sugarcane, the cost of goods sold is expected to decline moving forward, as prices are determined by market forces rather than fixed regulations. This transition to a market driven pricing model will likely lead to more competitive pricing, encouraging efficiency and cost reduction across industries. Despite sector headwinds, TSML managed stable operational performance through effective procurement and efficient plant utilization. On the financial front, TSML’s profitability declined during 9MMY25, with gross profit margin contracting to 13.4% (MY24: 16%), primarily due to rising costs and operational pressures. This contraction led to a compress net profit margin of 0.9% (MY24: 2.8%). Operating margin also moderated to 11% (MY24: 13%), reflecting higher operating expenses. Net working days remained elevated due to the accumulation of finished stock. Leverage indicators increased, with total borrowing rising to 62.8% (MY24: 58%), driven by higher reliance on short-term financing. TSML upholds a prudently managed financial profile, supported by a strong asset base, operational stability, and capacity for sustained growth. Governance and management remain key strengths; anchored by the Akhtar family’s strategic oversight, the leadership team leverages decades of expertise to steer the Company through evolving industry dynamics.
The ratings are contingent upon TSML's ability to maintain its market leadership, sustain business volumes, and preserve healthy margins while achieving optimal utilization of production capacities. Equally critical is the disciplined management of working capital to ensure liquidity buffers. In the prevailing challenging economic landscape, characterized by demand-side pressures, TSML’s relative performance against industry peers will remain a key determinant of its creditworthiness.

About the Entity
Tandlianwala Sugar Mills Limited commenced operations in Nov-92. The principal activities of the Company is production and sale of crystalline sugar including its by-products i.e. molasses, bagasse, Ethanol & C02. The company is majorly owned by Akhtar Family. The overall control of the company vests in seven-member Board of Directors (BoD), including the CEO. The installed capacities are | Sugar - crushing at 48,500 TCD | Distillery to produce 265,000 liters of EPD | CO2. TSML plants are located at Faisalabad, DIK and Muzaffargarh, Punjab. The shares of the Company are listed on the Pakistan Stock Exchange Limited.