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Karachi, AGL held a corporate briefing session today to discuss its performance and projections for the 2023 fiscal year, revealing key insights into its operations, financial strategies, and market position.
According to AKD Research, AGL anticipates that the industry offtakes for urea will reach approximately 6.8 million tonnes by the end of the calendar year 2023, conditional on consistent gas supply. The company projects its market share in urea to close at around 4%, while its share in phosphates (SSP and DAP imports) is expected to remain stable at 1.3%. Specifically, AGL’s market share in SSP is around 70%, which it aims to increase in future periods.
During the first nine months of 2023, AGL experienced a significant reduction in gas supply, receiving gas for only 185 days compared to 264 days in the same period last year, resulting in a 26% decrease in urea production year-over-year. Additionally, the company faced a 47% increase in feed gas price, now at PKR 1,239 per mmbtu, up from PKR 839 per mmbtu in the same period last year.
Following a scheme of arrangement sanctioned by the Lahore High Court in July 2022, AGL has increased its authorized share capital from PKR 15 billion to PKR 35 billion and has paid PKR 1.5 million out of PKR 1.6 million outstanding to lenders. The company is also planning to issue preference shares and PPTFCs by the end of 2023.
AGL received indigenous gas from March to October 2023 at unsubsidized rates and will be shifted to RLNG supplies at a subsidized rate of PKR 1,239 per mmbtu until March 2024 due to increased gas demand in winter.
The company owns land in Mianwali, of which approximately 500 acres is currently utilized for its manufacturing facility and housing colony. The remaining land may be available for sale in the future.
Despite previous announcements about potential acquisition discussions, no progress has been reported to date. Under the scheme of arrangement, AGL presented two options for clearing accumulated mark-up or both principal and mark-up, and has received mixed interests in both.
Post-arrangement, AGL expects to convert long-term borrowings related finance costs to dividend payables, leaving only short-term borrowings. The scheme does not cover common stock options.
AGL is also aiming to restructure its short-term borrowings and is working to streamline its SSP production, though management did not comment on the quantity of phosphate rock required due to varying quality levels of local rock.
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