October 31, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Pak Arab Fertilizers Limited at ‘A-‘ for long term and ‘A2’ for short term, with a ‘stable’ outlook forecasted.
According to the rating agency, 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 Pak Arab Fertilizers; including Ammonia, Urea, Nitric Acid, NP, CAN and clean development mechanism, said in a press release.
According to the report, the Company's financial profile is reflected by a thin topline, majorly secured through DAP trading. Eroded margins accompanied by hiked borrowings added stress to the dwindled position. Post-acquisition, Pak Arab 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.
As per the official release by PACRA, 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.
Pak Arab Fertilizer Limited is owned by a consortium between two major business groups in Pakistan namely Fatima Group and Arif Habib Group.
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