Lahore, May 31, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned a long term rating of “A” (Single A) and short term rating of “A2″ (A Two) to DH Fertilizers Limited (DHF). The ratings denote a low expectation of credit risk and a strong capacity for timely payment of financial commitments.
The ratings reflect DHF’s presence in the fertilizer sector, mainly urea, wherein the demand dynamics are strong amidst continuing supply deficit, despite expansion in the industry.
Although the company’s operations have been inflicted from acute gas shortage in the country, compensatory increase in urea prices by industry leaders lent sustainability to the company’s operations.
Apart from its Fertilizer business, DHF carries a sizeable strategic investment book supplementing its core income. The company carries long-term debt; but core cashflows being under pressure, respective debt coverages are stretched.
However, comfort is drawn from the blanket guarantee of the parent – Dawood Hercules Corporation – for this debt.
The ratings are dependent on the management’s ability to sustain its production, in the wake of continuing gas shortage in the country. Meanwhile, any significant drop in cashflows and resultant coverages or deterioration in the perceived group ability to manage its financial profile would be critical for the ratings.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425