Lahore, November 01, 2018 (PPI-OT): The ratings reflect strong business profile of the company on the back of diversified product mix. Secure supply of gas from Mari field together with lower feed stock price (under fertilizer policy -2001 up till 2021), represents inherent strengths of the company compared to its peers. Overall capacity utilization continued to exceed 100% (previously: 90% – 98%) based on ammonia debottlenecking. In line with the industry, company revived from the supply surplus situation due to oversupply in the domestic market.
Plus, the latest domestic supply/demand scenario is favourable, increased urea prices, provided additional cushion to the business in enhancing its margins. Eyeing for a prolific business model, Fatima Fertilizer has proposed merger with its wholly owned subsidiary – Fatimafert along with the acquisition of all five fertilizer plants of its associate – Pakarab Fertilizer Limited including Ammonia, Urea, Nitric Acid, NP, CAN and clean development mechanism.
Regulatory approvals are being sought. Post-acquisition, Fatima Fertilizer tends to become a prominent supplier of CAN and NP with the overall nameplate capacity of 2,572,400 Metric tonnes/year. Fatima Group has also ventured an undertaking to secure gas supply to Pakarab by laying gas pipeline. The leveraging is expected to move up yet would remain aligned with the risk profile of the entity. Given strong cashflows, financial risk remain comfortable. The ratings are dependent upon the company’s ability to absorb debt profile of the proposed acquisitions. Revival of the Pakarab’s plants, acquired by Fatima Fertilizer is crucial.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Category: General Business News