PACRA Updates Entity Ratings of Welcon Chemicals (Private) Limited

Lahore, March 21, 2023 (PPI-OT): The assigned ratings of Welcon Chemicals (Pvt) Limited reflects the Company’s growing business activities and rising profitability. The Company’s product portfolio is wide, encompassing over 70 diverse products ranging from pesticides to seeds and fertilizers. While pesticide raw ingredients are mostly imported from China and UK whereas fertilizer raw material is produced and processed locally. The Company maintains a robust and extensive sales market through a massive dealership network all over the country.

Furthermore, in order to strengthen its income stream, the Business has included biofertilizers in its product line. Biofertilizers, a less expensive, locally produced substitute for exorbitant urea and DAP fertilizers, are now gaining popularity in the local market. The revision in short-term rating factors in the improvement in liquidity position and debt coverage indicators of the company during FY22. Further, the ratings continue to derive strength from the long-standing experience of the sponsors in the pesticides industry, its established track record of operations and strong competitive position of its diversified products in the country.

Pakistan’s agriculture sector suffered massive losses as surplus rains and floods have devastated major crops. However, the Company was able to mitigate this risk on account of an efficient procurement strategy. The ratings, however, remain constrained by the fluctuations in raw material prices owing to PKR depreciation and fragmented and competitive nature of the pesticide industry.

The ratings are dependent upon an improvement in the business and financial profile of the Company. Any deterioration in the topline, margins or cashflows remains critical to the ratings. The Company’s sustained business performance in the currently stretched economic scenario remains vital to the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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