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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Dec-18

Analyst
Usman Amjad
usman.amjad@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Engro Corporation Limited

Rating Type Entity
Current
(28-Dec-18)
Previous
(27-Jun-18)
Action Maintain Upgrade
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect Engro Corporation's ('Engro Corp') very strong risk profile. The HoldCo's diverse pool of investments previously under its three strategic pillars i.e. fertilizer, consumer goods and energy have been re-aligned to four strategic pillars i.e agri-solutions, consumer, energy infrastructure and petrochemicals. Significant liquid resources post divestment of sizable stake in EFoods, EFert and Elengy Terminal allow Engro Corp to explore various investment avenues.
Engro Corp’s existing portfolio has shown significant growth. While, EFert and EVopak continue as stable cash producers, EPolymer and Elengy have also joined the ranks. This has added the much needed diversity to the HoldCo's revenue streams which would further strengthen with increase in dividends.
Of late EPolymer has made a major turnaround owing to fundamental changes in the international industry dynamics supplemented by operational efficiencies. Given the strong demand in the local markets and the company’s fortified position in the PVC industry, EPolymer is expected to reap full benefits of it’s planned expansion. Engro Corp has sizeable investment in energy chain through Engro Energy. Here, coal mining along with coal based power plant are the key projects.
Engro Corp is operating at a modest leverage signifying low financial risk. It's strategy to limit debt levels to fifty percent of its equity(excluding sovereign linked debt) at group level give comfort to its current ratings. The ratings also recognize the HoldCo's re-alignment of its organizational structure, which allows greater control over the strategic direction of its subsidiaries.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion. Sustainability in the performance of subsidiaries as envisaged along with effective management of financial profile on a group-wide basis remains important.

About the Entity
Engro Corporation Limited is a public listed company. The principal activity of the Company is to manage investments in subsidiary companies, associated companies and joint ventures. Dawood family holds 45% stake in Engro Corp majority of which is through its corporates, whereas less than 1% is owned through individuals of Dawood family. Mr Hussain Dawood chairs the Board of Directors whereas Mr Ghias Khan is President and CEO of Engro Corp.

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.