The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Updates Entity Ratings of Welcon Chemicals (Pvt.) Limited

Rating Type Entity
(21-Mar-23 )
(31-Mar-22 )
Action Maintain Maintain
Long Term BBB- BBB-
Short Term A2 A3
Outlook Stable Stable
Rating Watch - -

The assigned ratings of Welcon Chemicals (Pvt) Limited reflects the Company's growing business activities and rising profitability. The Company's product portfolio is wide, encompassing over 70 diverse products ranging from pesticides to seeds and fertilizers. While pesticide raw ingredients are mostly imported from China and UK whereas fertilizer raw material is produced and processed locally. The Company maintains a robust and extensive sales market through a massive dealership network all over the country. Furthermore, in order to strengthen its income stream, the Business has included biofertilizers in its product line. Biofertilizers, a less expensive, locally produced substitute for exorbitant urea and DAP fertilizers, are now gaining popularity in the local market. The revision in short-term rating factors in the improvement in liquidity position and debt coverage indicators of the company during FY22. Further, the ratings continue to derive strength from the long-standing experience of the sponsors in the pesticides industry, its established track record of operations and strong competitive position of its diversified products in the country.
Pakistan's agriculture sector suffered massive losses as surplus rains and floods have devastated major crops. However, the Company was able to mitigate this risk on account of an efficient procurement strategy. The ratings, however, remain constrained by the fluctuations in raw material prices owing to PKR depreciation and fragmented & competitive nature of the pesticide industry.
The ratings are dependent upon an improvement in the business and financial profile of the Company. Any deterioration in the topline, margins or cashflows remains critical to the ratings. The Company’s sustained business performance in the currently stretched economic scenario remains vital to the ratings.

About the Entity
Welcon, a private limited Company, was incorporated in the year 1994. It is the pioneer Company of the AllahDin Group. Welcon is majorly owned by Mr. Zain Iftikhar (53.7%), followed by Mr. Zia Ur Rehman (21.4%), Chaudhry Iftekhar Niaz (19.1%) and Mr. Masood Ur Rehman (3.2%) and Mrs. Ghazala Asmat, the wife of Ch. Iftikhar, holds (2.6%) shareholding of the Company. The Board of Directors comprises two members. Mr. Zain Iftikhar Chaudhry, son of Ch. Iftikhar Nazir, is the CEO of the Company. He is a graduate in Financial Management Services, from York University, Toronto. Mr. Zia Ur Rehman carries with him close to three decades of experience and has been on the Board since 1994.

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.