The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Assigns Initial Entity Ratings to Swat Agro Chemicals

Rating Type Entity
(21-Dec-22 )
Action Initial
Long Term BBB-
Short Term A2
Outlook Stable
Rating Watch -

The assigned ratings incorporate the established industry presence of Swat Agro Chemicals ("Swat Agro" or "AOP"). Swat Agro has a wide geographical reach in the domestic market, its strong operating efficiency, and extensive experience of sponsors in the pesticide business. Over the years, the AOP has developed a large portfolio of products comprising i) insecticides, ii) fertilizers, iii) micronutrients, iv) fungicides v) house-holds, vi) weedicides, vii) adjuvants, viii) and agri equipements. The strong presence in insecticides and fertilizer segments lifted the overall scale of operations and profitability of Swat Agro. The AOP has maintained a healthy business risk profile supported by a robust sales network across the country. Sponsors foster strong relationships with different multinational organizations. In addition to that with the collaboration of BASF chemical company, Swat Agro installed high standard SC & EC formulation plant. further, all raw materials of the AOP are imported from Europe and USA which reflects in their product quality. Swat Agro meets its working capital requirements through a mix of internal cash flows and short-term borrowings. The management intends to keep the leverage indicators aligned with its risk profile. The financial risk profile remains comfortable, given low leveraged capital structure and strong coverages.
The ratings are dependent on sustained business and financial profile of the firm. Any deterioration to margins and/or cash flows remains critical to the ratings. Improvement in governance structure would benefit management effectiveness and ratings.

About the Entity
Swat Agro Chemicals is a Partnership firm that was established in early 1996 under the Partnership Act 1932. The firm is owned by three partners, majority stake is with Mr. Barkat Ali Khan 50% while remaining 50% is equally split between Mr. Muhammad Alam Khan and Ms. Fozia Nazneen. Mr. Barkat Ali Khan is the Chief Executive Officer of Swat Agro; according to the partnership deed, a majority stakeholder in the firm holds the position of CEO or MD or Finance Director. Mr. Barkat Ali is assisted by an experienced management team.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.