Press Release

VIS Upgrades Entity Ratings of Fauji Fertilizer Bin Qasim Limited

Karachi, May 31, 2022: VIS Credit Rating Company Limited (VIS) has upgraded entity rating of Fauji Fertilizer Bin Qasim Limited (FFBL) to ‘AA/A-1’ (Double A/A-One) from ‘AA-/A-1’ (Double A Minus/ A-One). Long-term rating of ‘AA’ signifies high credit quality, and strong protection factors. Risk is moderate but may vary slightly from time to time because of economic conditions. Short-term rating of ‘A-1’ denotes high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. The last rating action was announced on March 16, 2021.

Upward revision in ratings is underpinned by growing importance of food security amidst developing economic situation across the world and consequent enhancement in strategic importance of the fertilizer sector for the Country. The assigned ratings to FFBL take into account the strong corporate and financial profile of major sponsor, i.e. Fauji Fertilizer Company Limited (FFC) and Fauji Foundation, which is a diversified conglomerate with strategic stakes in a wide variety of sectors including fertilizer, cement, food, power generation, gas exploration, LPG marketing and distribution, financial services, and security services. Furthermore, the ratings also incorporate sourcing of key raw material-Phosphate from associated concern- Pakistan Maroc Phosphore S.A. Morocco (PMP) along with FFBL’s revenue base diversification. Over the past 3-year period, revenues from subsidiaries/associates averaged at 22%.

Assessment of financial risk profile incorporates strengthening of financial indicators on a timeline basis. Profitability profile in 2021 was supported by higher revenue base led by increasing average selling prices, higher margins, lower finance costs due to de-leveraging, and one-off gain on disposal of investment in associate. However, improvement in bottom line was restricted on account of exchange loss, re-measurement loss on GIDC, allowance for expected credit losses and impairment of equity investment in a subsidiary. The higher turnover in 2021, and the resultant increase in FFO, translated in improvement in liquidity coverages against outstanding obligations. Going forward, the management projects increasing profitability and cash flow coverages leading to strengthening of capitalization and debt service indicators over the rating horizon. As per practice, VIS will continue to overview alignment of financial risk profile with parameters for the assigned ratings, annually.

Headquartered in Islamabad, Pakistan, FFBL is the sole domestic producer of Di-Ammonium Phosphate (DAP) fertilizer. It is also the only producer of granular form UREA (in contrast to widely marketed ‘prilled’ variant). FFBL enjoys leadership in DAP fertilizers with market share of 42% in 2021 and is Pakistan’s 4th largest producer of UREA. Both FFC and FFBL market their products under one umbrella brand ‘Sona’, which has wide recognition among the farmers’ community.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Asfia Aziz (Ext: 213) or email at

Javed Callea

VIS Entity Rating Criteria: Industrial Corporates (AUGUST 2021)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .