National Refinery Limited ("NRL" or "the Company") was established in Pakistan on August 19, 1963, as a public limited entity, with its shares listed on the Pakistan Stock Exchange. Its refinery complex consists of two lube refineries commissioned in 1966 and 1985, and a fuel refinery added in 1977, with designed capacities of 568,860 and 805,000 barrels per year of lube base oil, respectively, and a crude oil processing capacity of 17,490,000 barrels per year at the fuel refinery. The Company commissioned a Diesel Hydro De-Sulphurisation (DHDS) unit in FY2017 and an Isomerisation (ISOM) unit in FY2018 to enhance product quality and meet evolving environmental standards.

In July 2005, the Attock Group acquired a 51% shareholding in NRL and assumed management control following a competitive bidding process under the Government of Pakistan's privatization program, integrating NRL into one of the country's leading oil conglomerates with a strong presence across the petroleum value chain. The Attock Group retains majority ownership of 51% through Attock Refinery Limited (25%), Pakistan Oilfields Limited (25%), and Attock Petroleum Limited (1%). Other significant shareholders include the Islamic Development Bank (15%) and institutional investors collectively encompassing banks, insurance companies, NBFIs, joint stock companies, investment companies, Modarabas, mutual funds, and trusts (12%). The general public holds the remaining 22% of the issued share capital. The Attock Group maintains a long-standing and stable presence in Pakistan's oil and energy sector, with decades of integrated experience spanning exploration, production, refining, and marketing, and benefits from the strong backing of its principal sponsor, Pharaon Investment Group Limited Holding (PIGLH), a diversified international conglomerate. This depth of ownership and sponsor support is a relevant consideration for the proposed Sukuk, given the instrument is unsecured and therefore relies, in part, on the continued financial strength and stability of the wider Group.

The Board of Directors comprises eight members, including one Executive Director, three Independent Directors, and four Non-Executive Directors, with four members representing the Attock Group and one representing the Islamic Development Bank. Mr. Shuaib A. Malik, the Chairman, brings over four decades of experience across upstream, midstream, and downstream petroleum operations within the Attock Group. The Board operates through an Audit Committee and an HR & Remuneration Committee, both of which convened with full majority participation during FY25. The Board continues to adhere to the SECP Code of Corporate Governance, and for FY25 the financial statements were subject to a comprehensive external audit by A.F. Ferguson & Co., Chartered Accountants, who issued an unqualified opinion.

The Company is led by Mr. Asad Hasan as Chief Executive Officer, supported by a seasoned senior management team across six functional divisions: Operations; People and Culture; Administration; Commercial and Strategy; Finance and Corporate Affairs; and Procurement and Contracts. Mr. Nouman Ahmed Usmani, a Chartered Accountant with over 25 years of overall experience, serves as General Manager – Finance & Corporate Affairs and Chief Financial Officer. NRL has deployed SAP's ERP ECC-6 platform, generating MIS reports on a daily, fortnightly, and monthly basis, and has developed an in-house Crude Oil Management System to maintain accurate crude oil inventory balances. The scope of internal audit is clearly defined, encompassing review of internal control systems across the Company's activities and processes.

Pakistan's refining sector is structured as an oligopoly comprising five principal players — PARCO, Attock Refinery Limited (ATRL), National Refinery Limited (NRL), Pakistan Refinery Limited (PRL), and Cnergyico — with PARCO holding the dominant position at approximately 50.2% market share in 1QFY26. NRL and ATRL maintained mid-tier positioning, with NRL accounting for 15.1% of sector volumes in 1QFY26. As of 9MFY26, the sector witnessed a pronounced operational and financial recovery, underpinned by higher refinery upliftment, improved product crack spreads, and stronger HSD and MS sales volumes, aided by a late-February regional conflict. Within this operating environment, NRL recorded healthy growth in sales during 9MFY26, supported by improved refinery throughput and a more favorable product mix. The Company also demonstrated operational resilience by proactively diversifying its crude sourcing and adopting alternative procurement arrangements amid temporary supply chain disruptions, ensuring continuity of refinery operations. NRL reported a net profit of PKR 9.07bln for 9MFY26, reversing a net loss of PKR 14.49bln in the corresponding period last year. Despite the near-term recovery, the sector continues to face structural challenges, including almost NIL furnace oil demand locally, implementation of the Brownfield Refinery Policy 2023, and foreign exchange exposure.

As of March 31, 2026, NRL's working capital requirement increased materially, reflecting elevated international crude oil prices, which increased the value of inventories and procurement costs. Consequently, current assets expanded, driven primarily by higher inventories and trade receivables reflecting increased product prices and sales volumes, while current liabilities also increased in line with higher-priced crude procurements. In order to meet the working capital requirements effectively and efficiently the Company is considering to diversify its funding base through its inaugural PKR 10.0bln Rated, Unsecured, Privately Placed Sukuk. While the proposed Sukuk is unsecured and NRL remains exposed to volatility in international crude oil prices as the sector is, refining margins, and geopolitical developments affecting crude supply, PACRA derives comfort from NRL's strong operating cash flow profile and short cash conversion cycle, whereby crude oil is processed and refined products are sold into an active domestic market on shorter credit terms, enabling cash generation well within the proposed six-month Sukuk tenor. Additionally, the recovery in refining margins during 9MFY26 materially strengthened NRL's financial profile. Free Cash Flows from Operations (FCFO) improved to PKR 19.6bln from a deficit of PKR 7.6bln in FY25, resulting in FCFO-to-finance cost coverage of 3.4x (FY25: negative 0.7x). The improved profitability also strengthened the balance sheet, with leverage declining to 47.9% as of March 31, 2026 (June 30, 2025: 54.7%). PACRA considers the relatively short six-month tenor of the instrument, together with the Company's strong liquidity profile and operating cash flow generation, to provide adequate comfort regarding timely repayment. Additional comfort is drawn from the Company's established banking relationships and the financial strength of the Attock Group.

The Company is in the process of issuing a Rated, Unsecured, Privately Placed Sukuk of up to PKR 10,000mln to finance its working capital requirements effectively and efficiently. The Sukuk will have a tenor of up to six (6) months from the Issue Date, with principal repayable as a bullet payment at maturity. The profit rate is proposed at 3-month KIBOR minus up to 10bps per annum, subject to final pricing, and will be repriced quarterly, with profit payable upon redemption of the outstanding principal at maturity. The Company may, at its discretion, prepay the outstanding issue amount, in whole or in part, from internal cash flows by providing the Investment Agent with at least three (3) days' prior written and irrevocable notice. United Bank Limited and Faysal Bank Limited have been appointed as the Mandated Lead Advisors and Arrangers for the transaction. The Sukuk will be inducted into the Central Depository System (CDS) of the Central Depository Company of Pakistan Limited (CDC).

The Sukuk is unsecured, marking NRL's first-time issuance of a rated capital market debt instrument. In the absence of specific collateral or a ranking charge, holders of the Sukuk rank pari passu with the Company's other unsecured creditors and are structurally subordinated to any secured lenders with a specific charge over the Company's assets, to the extent of that security.

The instrument is unsecured; however, PACRA takes comfort from the Company's ability to generate stable operating cash flows through its short cash conversion cycle, together with its strong banking relationships and the financial strength of the Attock Group. These factors are expected to support timely repayment of the proposed six-month Sukuk.