Press Release
VIS Assigns Preliminary Rating to Proposed Short Term Sukuk of Engro Fertilizers Limited
Karachi, November 07, 2025: VIS Credit Rating Company Limited (VIS) has assigned a preliminary rating of ‘A1+(plim)’ (A one plus preliminary) to the proposed Short-Term Sukuk (STS) of PKR 20 billion of Engro Fertilizers Limited (‘EFert’ or the ‘Company’). The short-term rating of ‘A1+(plim)’ indicates strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. The rating will be finalized upon receipt and review of the final documents for the Sukuk.
Engro Fertilizers Limited, a key subsidiary of Engro Corporation, is one of Pakistan’s leading fertilizer producers. Incorporated in 2009 and listed on the Pakistan Stock Exchange, the Company maintains a strong nationwide commercial presence. EFert manufactures and markets urea, NPK complex fertilizers, phosphate-based products (DAP, MAP), and zinc-based fertilizers. Its operations include two urea plants at Daharki—Daharki Base and EnVen—with a combined capacity of 2.25 million tons per annum, as well as an NPK plant at Port Qasim with 100,000 tons annual capacity. DAP needs are met through imports.
The Company plans to issue a rated, unsecured, privately placed Short-Term Sukuk (STS) of up to PKR 20 billion, including a green-shoe option of PKR 5 billion, with a tenor of six months from the issue date. This is a rollover of an existing Rs 20 bn STS Sukuk which is due to mature on November 14, 2025. Proceeds of the STS were directed towards meeting the Company’s working capital requirements, particularly to support inventory. The proposed profit rate is 3M - KIBOR minus 0.15%. Both profit and principal are payable in a single bullet payment at maturity.
The assigned rating reflects EFert’s resilient business fundamentals, strong sponsor support from the Engro Group, and a consistent track record of strong cash flow generation. The fertilizer sector remains strategically important, given its central role in sustaining crop yields. The proposed short-term sukuk (STS) is a rollover of an existing facility and is primarily aimed at meeting higher working capital needs. These inventories reflect slower urea offtake and muted DAP sales in recent quarters, which have contributed to higher leverage. Management expects this to improve over the coming quarters as product offtake strengthens and inventory normalizes. Rating draws comfort from EFert’s strong cash flow history which provides buffer against near -term pressures and help contain rollover risk, supported further by the Company’s strong banking relationships and established market position. However, timely offtake recovery and disciplined working capital management will remain important to sustain short-term credit metrics.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf