The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (30-April-2005)
   

PACRA Assigns Ratings to National Refinery Limited (NRL)

 

 
Analyst
Maimoon Rasheed
(+92-42-586 9504)
maimoon@pacra.com

 

 

 









 

 

 



 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has assigned a long-term rating of “AAA” (Triple A) and a short-term rating of “A1+” (A One Plus) to National Refinery Limited. The ratings, applicable to the senior unsecured creditors of the company, denote the lowest expectation of credit risk emanating from exceptionally strong capacity for timely payments of financial commitments.

The ratings reflect NRL's unique position in the domestic refining industry emanating from its virtual monopoly in the high margin lube business. The company's low business risk is reinforced by its ability to change its product mix (both fuel and lube), owing to relatively higher operational flexibility. This enables the company to capitalise upon some demand-supply imbalances with the primary focus on value added items. The ratings also recognize the strategic vision of the company's forward-looking management, which has helped in achieving a sustainable improvement in overall operations. The ratings also take into account NRL's very strong financial profile emanating from virtually debt free capital structure and robust liquidity. This substantially mitigates the element of financial risk. Meanwhile, the profit retention policy has enhanced the risk absorption capacity of the company and this provides a cushion against any unforeseen contingencies.

About the Company: NRL was incorporated as a public limited company at Karachi in 1963. Government of Pakistan (GoP) took over the management of NRL under the Economic reforms Order, 1972. Presently NRL is under administrative control of the Ministry of Petroleum and Natural Resources, which is exercising control through its shareholding in State Petroleum Refining and Petrochemical Corporation (PERAC). Its privatization through the sale of 51% of equity along with management control is in process.

Due to the manner in which the refinery was constructed and expanded over the years, NRL effectively comprises three refineries. The three refineries are all located at the Korangi refinery site (263 acres) and include 1) Fuel Refinery, 2) Lube I Refinery, 3) Lube II Refinery, and 4) a BTX (Benzene, Toluene, Xylene) Plant. NRL has more than one fifth share of the total refining capacity of the country with around 95% average capacity utilization for the last few years.
 
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's 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.

 

    
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