PACRA Maintains Entity Ratings of Engro Fertilizers Limited

The ratings take into account sustained operations of the company; capacity utilization at both plants remained high on the back of continued gas supply from Mari and other. The risk of gas curtailment has diminished with strengthening of local reservoirs and continued import of RLNG. Better availability of gas has improved overall availability of urea in the market. This, along with declining international prices, has kept local prices under check. Industry’s ability to manage high business risk is dependent on price induced local demand increase; the export of excess inventory has helped towards supply-demand equilibrium in the market. EFert business fundamentals remain largely in line with industry dynamics. It has experienced squeeze in margins and, in turn, cashflows. Meanwhile, timely recovery of subsidy is important. The financial risk profile of the company is characterized by moderate leveraging. EFert continues to derive strength from its association with Engro Corporation – a corporate conglomerate.

The ratings are dependent on sustained risk profile of the company. Any constraint to perceived ability to keep business and financial risk in respective matrix may impact the ratings

About the Entity
EFert is 56.45% owned by Engro Corporation Limited (ECorp), a corporate conglomerate. ECorp is majority (37.2%) owned by Dawood Group (DG). EFert's urea plants (base 975k MT, Enven 1,300k MT) and NPK plant are located at Daharki and Port Qasim, respectively.

EFert's board comprises three Engro executives, one DG representative, and four independent directors. Mr. Ghias Khan, the CEO of the parent company, is the Chairman of the Board. Mr. Ruhail Muhammad, the CEO of EFert, is a seasoned professional enjoying a long association with Engro group