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Agritech Limited has demonstrated resilience and strength by producing urea fertilizer amid stable gas supply across SNGPL and SSGC networks, reports WealthPK.

The company operates two urea plants in Iskanderabad and Haripur, which rely on natural gas as a key feedstock. Thanks to the uninterrupted gas supply enabled by the government, Agritech managed to optimize production processes and meet market demands. In the nine months ending September 30, 2024, the company’s urea production increased by 3.7% to 4,942 kilotons against 4,765 kilotons last year. In Pakistan, where agriculture is vital, ensuring a reliable supply of urea is crucial due to challenges like fluctuating weather patterns, rising input costs, and economic pressures.

Therefore, this consistent urea production by Agritech is crucial for supporting local farmers and enhancing food security. Urea, a widely used nitrogenous fertilizer, is essential for healthy plant growth and crop yields. Thus, Agritech, a Pakistani fertilizer company, aimed to deliver consistent and affordable urea to the agricultural sector in Pakistan. Agritech Limited, incorporated in Pakistan in 1959, primarily operates in the production and sale of urea and granulated single super phosphate fertilizer.

According to the financial report on the Pakistan Stock Exchange (PSX), Agritech recorded a net sale of Rs19.02 billion in 9MCY24, a 37% growth compared to Rs13.9 billion in the previous year, indicating the company's effective strategies in navigating market dynamics and ensuring product availability. Furthermore, the gross profit reached Rs3.39 billion in 9MCY24, a significant increase from Rs2.39 billion in the same period year. This improvement can be attributed to increased sales volumes, enhanced operational efficiencies, and cost management practices implemented by the management team. Additionally, in 9MCY24, the finance costs grew to Rs5.17 billion, and the company incurred a net loss of Rs2.085 billion during the review period.

Despite the increase in the production of urea during the review period, the company observed a decline in urea off-takes, which fell by 7.5% YoY, from 4,945 kilotons in 2023 to 4,573 kilotons in 2024. This decline is attributed to economic pressures, such as high input costs and lower crop prices, and crop production challenges, such as reduced cotton sowing areas and declining maize and rice prices. As a result, Agritech experienced a significant increase in closing inventory levels at the end of Kharif 2024, from 77 kilotons in 2023 to 622 kilotons in 2024. Despite decline in profit, Agritech remains optimistic about its future, supported by stable gas supply and improved production capabilities.

Aligning with the government’s efforts to boost domestic urea production and enhance food security, the company is restructuring its long-term debt through a Lahore High Court-approved Scheme of Arrangement to reduce financial burdens and ensure sustainable operations. Additionally, Agritech is working with government authorities to secure long-term gas supply agreements for uninterrupted production. The company aims to enhance efficiency and cut costs through technological investments while expanding its market presence locally and exploring export opportunities amid growing global fertilizer demand.

Credit: INP-WealthPk