The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (02-May-2005)
   

PACRA Maintains Entity Ratings of Engro Chemical Pakistan Limited (ECPL)
 

 
Analyst
Ammar Ali
(+92-42-586 9504)
ammar@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 maintained the long-term entity rating of ECPL at “AA-” (Double A minus) and the short-term rating at “A1+” (A one plus). These ratings, applicable to senior unsecured creditors, denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.

The secured TFC tranche 2 of PKR 1,000mln, with redemption scheduled for May 27, 2005, has been assigned a short-term rating of “A1+” (A one plus). The rating denotes the highest capacity for timely repayment.

ECPL's ratings reflect the maintained overall risk profile in a favourable industrial scenario emanating from consistently rising fertilizer demand despite the uncertainty of government's gas pricing policy. The consistent augmentation of the bottom line through growing dividends from associated companies combined with ECPL's strategy of further diversified growth is also considered positive. In addition, the critical nature of the fertilizer industry in the national economy and Engro's strong position in the industry are also key factors.

About the instrument: The company currently has outstanding the second tranche (PKR 1000mln) of its TFC issue secured by a first pari passu floating charge on all present and future assets of ECPL as well as a first pari passu equitable mortgage over the Daharki plant site and all fixed assets of ECPL thereon. Availing the option of early redemption on the TFC issue, ECPL has announced the redemption of the tranche on May 27, 2005. In view of the strong cash flows and sound liquidity the capacity for timely redemption is considered very strong.

About the Company: Engro Chemical Pakistan Ltd. (ECPL) was incorporated in 1965 as Esso Pakistan Fertilizer Company Ltd. The core business of ECPL is manufacturing and marketing of fertilizers. ECPL has also diversified its interests, which mainly include two joint ventures with foreign companies, the first, Engro Vopak Terminal Ltd., being a jetty and chemical terminal facility at Port Qasim, and the other, Engro Asahi Polymer and Chemicals Ltd., the first PVC resin manufacturing plant in the country. The Dawood Group, having acquired 42% of the shares, is the largest shareholder in ECPL.

 
 
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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