PACRA Upgrades Entity Ratings of Fatima Fertilizer Company Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- January 23, 2023 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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The Country's total fertilizer production capacity stands at around ~ 7.1mln MT of Urea and CAN and ~ 1.7mln MT of DAP, NP, and NPK. Heavy monsoon spell observed in Jul-22 / Aug-22 resulted in inundation of areas in Sindh, Baluchistan and Southern Punjab damaging 4.5mln acres of agricultural land. In 9MCY22, despite floods the nitrogen (primarily Urea) industry in Pakistan has grown by ~ 2% whereas the phosphates industry has declined by ~ 43%. The year observed delayed buying for DAP as demand only materialized in Dec-22 owing to an increase in the support price of wheat and resulted in DAP offtake being plunged by 36% YoY. Despite the increase in gas prices, overall margins of the industry remained healthy mainly due to the increase in prices of fertilizer products. In the international market, prices of Urea and DAP witnessed an upward trend supported by increased demand.

The ratings reflect Fatima Fertilizer Company Limited's ('Fatima' or 'the Company') association with strong business Groups, Fatima Group and Arif Habib Group. The Company holds the highest market share in NP and CAN fertilizers. Furthermore, during the ongoing amalgamation of Pakarab Fertilizer Limited and its plants (Ammonia, Urea, Nitric Acid, Nitro Phosphate, Calcium Ammonium Nitrate, Clean Development Mechanism, LCO2) with and into the Company; the Company has increased its overall market standing and strategic importance. The Company has the highest nameplate capacity (2.57mln MT), in the fertilizer sector of the country.

The Company's topline comprising mainly of Urea, NP, and CAN has witnessed phenomenal growth driven by increased prices of fertilizer products during 9MCY22. The Company has maintained healthy...