Pakistan Credit Rating Agency Limited maintains ratings of DH Fertilizers Limited

Lahore, June 10, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of DH Fertilizers Limited (DHFL) at “A-” (Single A minus) and A2″ (A two) respectively. These ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong.

The ratings of DHFL reflect its strong parentage – Dawood group. The group, while offering dynamic business acumen, possesses good financial flexibility – mainly through its different entities – to support DHFL’s financial profile, if need arises.

DHFL, in addition to its core fertilizer business, carries a sizeable strategic investment book. The book provides a dividend stream to the company in addition to potential capital gains due to appreciation in market value.

This comforts the financial risk profile of the company, which is relatively stretched due to constrained core cash flows – emanating from continuing gas shortages and major debt payments. Although, DHFL undertakes DAP trading business, the sale provides limited support.

The support from the group and investment book are in hand; however, the management prefers to realign debt repayment with expected operational cash flows. Meanwhile, DHFL, along with other fertilizer manufacturers, is taking tangible steps towards permanent resolution of gas issues.

The ratings are dependent on sustainable gas supply through the envisaged plan. Meanwhile, timely channelization of resources or reprofile of the debt, if need arises, is important to uphold financial profile, in turn, ratings.

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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