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Pakistan Credit Rating Agency Limited Upgrades Entity Ratings of Fatima Fertilizer Company Limited

Lahore: The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term entity rating of Fatima Fertilizer Company Limited (Fatima) to “A+” (Single A Plus) [previously “A”], while the short term rating is maintained at “A1″ (A One). These ratings denote low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect significant improvement in the risk profile of Fatima Fertilizer. Fatima has achieved CoD beginning this July for its entire fertilizer complex. The plants have demonstrated sustainable performance, and mostly operational capability close to the level of design capacity. The company benefits from strong inherent demand of nitrogenous fertilizers in the country.

For phosphatic product having lower market size and price sensitivity, the management has envisioned a plan to develop sustainable demand. A sizeable proportion of the country’s fertilizer industry is grappling with acute gas shortage. However, Fatima, being on Mari shallow field, mainly dedicated to fertilizers, is largely insulated from this loadshedding.

Fatima has benefitted from compensatory urea-led increase in fertilizer prices, wherein the impact is fully translated into its profits and cash flows. Resultantly, the company’s financial risk profile has eased off, though overall debt levels remain high.

The ratings depend on sustainability in the performance of Fatima Fertilizer, which, in turn, recognize stable supply of basic raw material to the company.

Meanwhile, upholding of best corporate governance practices and improvement in the control environment coupled with risk evaluation and management framework, in line with its upcoming expansionary plans, would be crucial.

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

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