PACRA Maintains Entity Ratings of Fatima Fertilizer Company Limited : AsiaNet-Pakistan

PACRA Maintains Entity Ratings of Fatima Fertilizer Company Limited

August 21, 2019 | General Business News | Share:

Lahore, August 21, 2019 (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. In view of discontinuation of urea subsidy scheme, the industry has increased the prices of fertilizers as well. GIDC related developments are expected to crystallize over the course of time, of which the impact will be clear once materialized.

The future demand supply scenario depends upon the economic dynamics of the farmer community, given input price escalation, and production from the stand-by plants (Agritech and Fatimafert). Eyeing for a prolific business model and as per plan, Fatima Fertilizer is in process of acquiring the production and operating plants of its associate – Pakarab Fertilizer Limited including Ammonia, Urea, Nitric Acid, NP, CAN and clean development mechanism.

The proposed merger with its wholly owned subsidiary – Fatimafert and asset deal with Pakarab Fertilizer is yet to crystallize – awaiting regulatory approvals. 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 – which is in last phase of its completion. 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 Pakarab’s plants, acquired by Fatima Fertilizer is underway.

For more information, contact:
Analyst
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
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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Category: General Business News