The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term entity rating of the Engro Chemical Pakistan Limited (ECPL) to "AA" (Double A) while maintaining the short-term rating at "A1+" (A one plus).
These ratings denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.
ECPL ratings reflect its very strong capital structure and sustained profitability. The ratings also reflect its low business risk profile, as the local fertiliser industry is now operating in a seller's market with assured sales and stable margins.
Meanwhile, the continuous business diversification is strengthening the company's capacity to absorb the impact of any unforeseen negative developments in the sector.
The Engro Chemical Pakistan Limited was incorporated in 1965. The core business of the ECPL is manufacturing and marketing of fertilisers. It is the second largest producer of urea in the country, which is produced at the plant site in Daharki.
The company has also diversified its interests, which mainly include two joint ventures with foreign companies, the first, Engro Vopak Terminal Limited, being a jetty and chemical terminal facility at Port Qasim, and the other, Engro Asahi Polymer and Chemicals Limited, the first PVC resin manufacturing plant in the country.
The Dawood Group, having acquired 42 percent of the shares, is the largest shareholder in the ECPL. The association of the Dawood Group has augmented the capacity of the Board to guide the management in formulating its long-term strategy.
As part of its diversification strategy, the ECPL has entered into food business, and is planning to step into the energy sector by establishing its subsidiary along with acquiring another IPP.
The increasing business diversification would inevitably further strengthen the earning base without compromising the risk profile of the company.