Pakistan Credit Rating Agency maintains ratings of Engro Corporation limited

Lahore, June 27, 2013 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the long term entity rating of Engro Corporation Limited at “A” (Single A) and the short-term rating at “A1” (A One). The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments. The ratings of the two secured and listed TFCs of PKR 4,000mln and PKR 2,754mln are maintained at “A+” (Single A plus).

The ratings reflect ECL’s articulated holding company mandate aimed at creating value in its companies. The salient features of this mandate include development of a central pool of executive management capable of managing independent businesses, a focused strategy-setting function, and strengthening of governance framework.

The ratings take into account ECL’s diversified investment portfolio, which while highlighting its risk absorption capacity, provides space to raise requisite funds. A stable income stream supplements ECL’s standalone financial profile which is supported by stable dividend stream. However, on an overall group basis financial coverages are relatively stretched.

The Corporation’s fertilizer business is facing a major challenge due to shortage of key raw material. Although meaningful progress is made, material benefits are expected to flow beginning FY15. The remaining business ventures are growing with limited need of financing support from the holding company.

These ratings are dependent upon the corporation ability to sustain a robust mechanism for providing strategic guidance to all group companies while maintaining an effective control environment. Meanwhile, effective management of the group’s financial risk profile in line with the relevant debt agreements remains critical for the ratings.

For more information, contact:
Hammad Rashid
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