PACRA Maintains Entity Ratings of Fatimafert Limited | Rating Watch

The ratings of Fatimafert reflect the strength of its sponsor - Fatima Fertilizer Company Limited - offering dynamic business acumen and strong financial flexibility. Fatimafert’s plants remained idle for most of the period CY18 due to suspension of gas. The pressure released followed by revival of closed plants at subsidized rates in the last quarter of CY18 and has been contributing towards the country's total Urea production by ~5%. Fatimafert plants resumed to life Sept’18 and operating since then, where it operated for only 85 days in the entire CY17. Despite the favorable domestic demand/supply scenario in the market, continued gas challenges overshadowed the overall company’s operations. The Company's financial profile suffered due to the country's current economic downturn - added more strain. Eyeing for a sustainable yet value adding business profile, a group level business strategy has been laid out as per which Fatima Fertilizer Company Limited (Fatima) is merging Fatimafert Limited (its wholly owned subsidiary) with and into itself. The General body of the Company in their Extra Ordinary General Meeting has approved the scheme of amalgamation, as approved by the board, subject to fulfilling all legal requirements. The process of amalgamation is expected to close in short horizon.
The ratings are kept under 'Rating Watch' in anticipation of merger with Fatima Fertilizer Company Limited. The Company is expected to completely dissolve once regulatory approvals are sought.

About the Entity
Fatimafert is a wholly owned subsidiary of Fatima Fertilizer Limited (Fatima). Fatima Fert manufactures and markets urea under the brand name "Bubber Sher". The plant, located in the vicinity of Lahore, has the nameplate capacity of 445,500MT per annum. Fatima is a joint venture between two major business groups in Pakistan; Fatima Group (45%), Arif Habib Group (31%) and Fazal Group (15%). Fatima Fertilizer is a fertilizer complex. In addition, the group owns Pakarab Fertilizers Limited and Fatima Fert. It also has interests in textile, sugar and energy sectors.
Fatima Fert's board comprises six members; two representing Arif Habib, three from Mukhtar Family, and one employee of Fatima Group. The board is aligned to the board of Fatima Fertilizer Limited. The chairman of Arif Habib, Mr. Arif Habib, an eminent businessman and a successful entrepreneur, chairs the company's board. Fatima's current management has been entrusted with additional charge of Fatima Fert Limited. Therefore CEO of Fatima, Mr. Fawad Ahmed Mukhtar, a seasoned entrepreneur, is also CEO of Fatima Fert.