PACRA upgrades Fauji Fertilizer Company's Long Term Entity Rating to AA+

Pakistan Credit Rating Agency (PACRA) on Monday, July 30, 2018, upgraded the long term Entity Rating of Fauji Fertilizer Company Limited from AA to AA+ and maintained the A1+ rating on its short term outlook.

Overall, a Stable Outlook was maintained by the rating agency.

The ratings reflect FFC's dynamic business profile and financial position while incorporating the sound financial strength of Fauji Group, says the rating agency.

FFC is one of the largest players in the fertilizers market in terms of its production capacity.

The strong business footprint of FFC has enabled the company 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,” the rating agency added.

In line with the industry, FFC also faced urea oversupply situation in 2017. However, the export of excess urea allowed by the Government, provided much relief to the business.

PACRA believes that the latest domestic supply demand scenario is also favourable for the firm. In view of discontinuation of urea subsidy scheme and increasing production costs, the industry has increased the prices of fertilizers as well.

FFC carries a sizable book of diversified investments, both long term and short term, which has been developed to offer sustainable returns to its stakeholders.

FFC marked its presence into the financial sector via a sizable stake in Askari Bank (43.15%) in 2013, which has a distinct presence in Pakistan's financial sector: dividend stream from these investments compliments FFC's ratings.

Under its diversification strategy, FFC is evaluating investment in offshore fertilizer project, besides investing in the power sector of the Country; leveraging associated with business ventures will require oversight and close attention.