PACRA Maintains the Entity Ratings of Fatima Fertilizer Company Limited

Fatima Fertilizer Company Limited ('FFCL' or 'the Company') continues to demonstrate its strategic significance in Pakistan’s fertilizer sector, which operates under an oligopolistic market structure. This is reflected by the assigned ratings, underpinned by strong business fundamentals and sponsor strength. The rating incorporates the Company’s sustained operational expansion and improvement over the past two decades, driven by strategic initiatives and continuous BMR activities thereby enhancing resilience and efficiency. These efforts have been supported by a sound governance framework, a strong control environment, and a qualified, experienced management team driving consistent execution. In CY24, the Company achieved several milestones, including becoming the first private-sector Company in Pakistan to adopt the UNDP SDG Impact Framework, the launch of the Sarsabz Agri Mart with six retail outlets to ensure access to quality fertilizers at controlled prices, along with the improved fertilizer production at its Multan and Sheikhupura plants since their commissioning. The Company is currently undergoing operational restructuring, with operations related to the Sheikhupura plant transferred to Fatimafert Limited, a wholly owned subsidiary. Additionally, the carve-out of Multan operations into another wholly owned subsidiary, Pakarab Fertilizers, is awaiting court approval. The Company operates with a total nameplate capacity of 2.57 million metric tons and, in CY24, NP held a leading position in the business valuation matrix, contributing 45.0% to total revenue, followed by Urea at 29.0%, CAN at 19.0%, and DAP at 6.0%. During CY24, the Company’s topline reached PKR 238.42bln, reflecting a modest growth of 2.4% compared to PKR 232.75bln in CY23, primarily driven by the firm product pricing throughout the period. In 1QCY25, the Company’s topline declined to PKR 42.95bln (1QCY24: PKR 65.25bln), primarily driven by a further contraction in the fertilizer offtake during 1QCY25, following the downward trend from CY24. The inventory was piled up at March end, however, this buildup is in line with the industry trend. Management expects a rise in offtake during the upcoming Rabi season, supporting a potential rebound in subsequent quarters. The Company secured healthy margins and strong profitability, supported by efficient operational management, cost optimization measures and improved product pricing. The Company has undertaken several renewable energy initiatives, including the installation of a 3MW solar power plant at its Sadiqabad facility and a 1.25MW plant at its Sheikhupura site. The Company has maintained a diversified investment portfolio, encompassing strategic and non-strategic holdings, which strengthens its overall liquidity profile. The Company’s financial risk profile is considered strong, supported by strong cashflows and sound credit quality metrics. The coverage ratios provide ample support for the ongoing business operations.
The ratings are dependent on the Company's ability to sustain its margins and healthy coverages while maintaining the adherence to strong financial discipline. The realization of synergies after the operational restructuring plays a pivotal role.

About the Entity
It is a joint venture between two prominent business conglomerates, Fatima Group and Arif Habib Group. The principal activity of the Company is manufacturing, producing, buying, selling, importing and exporting fertilizers and chemicals. Fatima Group holds approximately 59.0% of the Company’s total shareholding, while Arif Habib Group owns around 32.0%. The remaining 9.0% of the Company’s shares are held by the general public.