The Ugar Sugar Works Limited — Credit Ratings, 22-05-2025: Credit Rating- Revision

CARE Ratings has downgraded The Ugar Sugar Works Limited’s long-term bank facilities and fixed deposit rating from CARE BBB-; Stable to CARE BB+; Negative. This reflects a sharp profitability decline in FY25 driven by lower sugarcane crushing, higher cane procurement costs without matching sugar and ethanol price increases, and rising interest and depreciation expenses post distillery expansion. The company’s financial health has weakened, with gearing increasing to 2.83x and interest coverage dropping to 0.83x. Liquidity pressures arise from significant upcoming debt repayments and high working capital borrowings. The downgrade raises the cost of borrowing and may weigh on investor confidence unless profitability improves in FY26.