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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Jun-19

Analyst
Silwat Malik
silwat.malik@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-Jun-19)
Previous
(28-Dec-18)
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect Engro Corporation's ('Engro Corp') established position as a conglomerate with a diverse pool of investments under four verticals: food and agriculture, petrochemicals, energy and related infrastructure, and telecommunication infrastructure.
Respective businesses under the Umbrella of the Holdco. exhibit their strength through continued growth trajectory in CY18 despite a challenging economic environment. Engro Fertilizer ('Efert'), being the second largest in the fertilizer sector, increased it's market share in CY18 and is expected to remain stable. Engro Polymer and Chemical ('Epolymer) has a fortified position in the local PVC industry with capacity enhancements in progress and new Hydrogen Per Oxide project on the cards. The sizeable investments in the energy chain, through Engro Energy have progressed in a timely manner and are expected to come online in July, 2019. EFert, and EPolymer announced higher dividends compensating for no dividend declared by Engro Elengy Terminal ('Elengy') after the Group's divestment of 24% stake in the business. EVopak continued as a stable cash producer. 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 gives comfort to ratings. The ratings factor in HoldCo's organizational structure, designed to control the strategic direction of its subsidiaries, and strong governance framework.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion. Sustainability in the performance of subsidiaries with effective management of financial profile to continue as stable dividend producing entities for the group remains critical. Meanwhile, effective utilization of liquid assets to enhance investment portfolio is 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.