August 2, 2019 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Fauji Fertilizer Company Limited at ‘AA+’ for long-term, and ‘A1+’ for short-term. The outlook on the assigned ratings is stable.
The ratings reflect FFC's dynamic business profile and financial position, while incorporating the sound financial strength of Fauji Group.
FFC is one of the largest players in the fertilizers market in terms of its production capacity. Its strong business footprint has enabled it to build an impeccable brand in Pakistan with “Sona” being a household name in the farming community. The production facilities are secured by uninterrupted supply of gas from Mari field, representing inherent commercial strengths of the company in terms of sustainable business volumes.
FFC has maintained highest production levels and the related profitability is sanguine. It is prominently placed in the industry.
In view of the discontinuation of urea subsidy scheme and increasing production costs, the industry has included the impact thereof in urea prices to maintain the margins. GIDC related developments, as and when crystallized, would provide benefit to the industry players.
The ratings take into account FFC's sizable book of diversified investments, both in the long term and short term, which has been developed to offer sustainable returns to its stakeholders. Dividend stream from these investments compliments FFC's ratings.
FFC continued the expansion of its investment portfolio by extending its reach to the power sector, as evident from its investment in Thar Energy Limited. Under its diversification strategy, FFC is going ahead with an investment in an offshore fertilizer project. Leveraging associated with business ventures, will require oversight and close attention.
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