Pakistan Credit Rating Agency revises ratings of DH Fertilizers Limited

Lahore, August 31, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has revised the long term entity rating of DH Fertilizers Limited to “A-” (Single A Minus) [previous: “A”], while maintaining the short-term rating to “A2″ (A Two). The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect weakening in the overall profile of DHF. This has ensued as a result of intensification in the gas shortage to the company, a phenomenon common to all urea plants connected to SNGPL’s network. As against earlier expectation of status quo, the situation has exacerbated since beginning 2012; the company produced urea for slightly above one month only in the last eight months. Moreover, in the absence of any alternate gas source, the company remains dependent on supply through SNGPL for achieving any production; the prospects of which are sanguine over the near term. The company is dependent on revenues from trading in DAP and return on investments to meet scheduled debt payments; wherein respective coverages have diluted.

Nevertheless, given liquid nature of its sizeable investment book, the company retains the option to meet its financial commitments through divesture of these investments. Meanwhile, association of the company with DH Corp remains a key rating factor.

For more information, contact:
Hammad Rashid
Analyst
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
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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