PACRA Maintains Debt Instrument Rating of Pak Arab Fertilizers Limited

Lahore, February 19, 2019 (PPI-OT): The company leverages on its ownership strength derived from Fatima Group and Arif Habib Group. Sponsor patronage in the shape of a turnaround plan has come to the rescue. A group level business strategy has been laid out as per which Fatima Fertilizer Company Limited(FFCL) is planned to acquire its wholly owned subsidiary-Fatimafert Limited along with major operating plants of its associated Company Pakarab Fertilizers; including Ammonia, Urea, Nitric Acid, NP, CAN and clean development mechanism.

Materialization of the proposed plan is to be achieved as regulatory approvals are being sought. The strained risk profile of the company, owing to gas curtailment persisted to be the major hurdle. The Company’s financial profile is reflected by a thin topline, majorly secured through DAP trading. Diminishing margins accompanied by hiked borrowings added additional stress to the dwindled position. Post-acquisition, Pakarab Fertilizer is expected to develop a small yet a sustainable business model.

Revenue stream would majorly include income from DAP trading, Carbon Dioxide plant activity, and other non core activities, these income stream alongside consideration for acquisition from Fatima Fertilizer should enable the company in meeting its financial need. The rating are kept under ‘Rating watch’ to surveil the roll-out of the acquisition plan. The ratings would be updated once the evolving position is settled.

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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