The Pakistan Credit Rating Agency (Pacra) has assigned a long-term rating of 'AA-' (double A minus) and a short-term rating of 'A1+' (A one plus) to Attock Refinery Limited (ARL). The ratings, applicable to the senior unsecured creditors of the company, denote a very low expectation of credit risk emanating from a very strong capacity for timely payments of financial commitments. The ratings reflect ARL's sustained robust performance over the years in a high-volume, low-margin industry that is subject to volatile input and output prices.
The ratings also take into account the company's very strong financial profile emanating from a virtually debt-free capital structure and strong liquidity. This substantially mitigates the element of financial risk.
Moreover, the strengthening equity base due to mandatory minimum 50 percent profit retention would continue to provide significant cushion against any future unforeseen events.
Nevertheless, the company remains exposed to the cyclical nature of refining margins. However, this concern is somewhat mitigated by the recent upturn in the refining industry coupled with higher expected international oil prices.
The ratings also factor in the benefits accruing to the company from its association with the only fully integrated group in the petroleum sector of the country.
The Attock Oil Company Ltd, incorporated in UK and a pioneer in oil refining in South Asia, started refining operations in Pakistan in 1922. The ARL was incorporated in 1978 to take over the crude oil refining business from the AOC, which has 52.5 percent shareholding in the ARL, which is listed on all the three stock exchanges of the country, and currently has refining capacity of 37,500 barrels per day. The company's refinery is strategically located upcountry in the north of Pakistan, and caters to the petroleum products requirements in its region of location.
The company is a member of the Attock Group of Companies, a fully integrated group covering all segments of oil and gas industry from exploration, production and refining to marketing of a wide range of petroleum products.
In Pakistan, the Attock Group has considerably representation in the petroleum sector through its exploration companies - Attock Oil Company Ltd and Pakistan Oilfields Ltd, and an oil marketing company - Attock Petroleum Limited in addition to the refining company.
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