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CRAB ICRAB Ratings on Corporate Credit Digest I 29 January 2013


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Credit Rating Report
Petromax Refinery Ltd.

Particulars Ratings Remarks
Petromax Refinery Ltd. BBB3
BDT 1,310.0 Million Long- term Outstanding BBB3 (Lr) Details are at Appendix 1
Outlook Stable
Lr- Loan rating, ST- Short Term
Date of Rating: 22 December 2012
Validity: Entity rating is valid till 30 June 2013; loan ratings are valid up to limit expiry date of respective credit facilities or till 30
June 2013 whichever is earlier.
Rating based on bank liability position as on 26 May 2012 and other relevant quantitative as well as qualitative information up to
the date of rating declaration.








Table 1: Cost of the project
Value Percent
Land and Land Development 41.8 1.3%
Building and Civil Engineering 259.6 7.8%
Imported Machinery 2,173.6 65.6%
Local Machinery 130.0 3.9%
Erection and Installation 165.0 5.0%
Furniture, Fixture and Equipment 7.0 0.2%
Fire Extinguisher 2.5 0.1%
Vehicle 13.8 0.4%
Preliminary Expense 140.0 4.2%
Contingency Expense 66.7 2.0%
IDCP 312.0 9.4%
Project Cost Excluding IDCP 3,000.0 90.6%
Project Cost Including IDCP 3,312.0 100.0%
Note: Amount in BDT Million








Analysts
Mir Arif Billah
mab@crab.com.bd

Md. Abdur Rahman Evan
evan@crabrating.com

RATIONALE

Credit Rating Agency of Bangladesh Ltd. (CRAB) has
assigned BBB3 (pronounced triple B three) to
Petromax Refinery Ltd. CRAB has also assigned
BBBB3 (Lr) rating to BDT 1,310.0 million long- term
loan to Petromax Refinery Ltd.
Petromax Refinery Ltd. is a private limited company
incorporated in 2008. The projected outputs have
treatment capacity of 2,500 barrel of natural gas
condensate daily to produce LPG, Octane, SBP,
Turpentine, Kerosene, and Diesel. Condensate is
valuable coproduct of natural gas production. The
Company planned to produce these petroleum
products to sell to Bangladesh Petrobangla
Corporation at the price fixed by the Government.
The Company got licence from Ministry of Power,
Energy and Mineral Resources.
The project site is located at Mongla Port at Khulna,
which is considered a good location connected with
port facilities, river, road and rail access. The
implementation of the project has been lingered
due to delay completing construction work,
confirming with suppliers contract and contract
with Bangladesh Petroleum Corporation,
Petrobangla etc.


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Petromax Refinery Ltd.


www.crab.com.bd; www.crabrating.com
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The project site also enjoys all infrastructure facilities such as electricity, gas, skilled labour etc. Total size of the
project is BDT 3,000.0 million out of which 57%will be contributed by the shareholders. The shareholders have
already invested their portion of BDT 1,700.0 million. The Company has been facilitated long- term loan of BDT
1,300.0 by different commercial banks. However, it also require huge non- funded working capital fund importing
the condensate.
Initially the project was designed at cost of BDT 2,391,7 million, in later period the cost was increased by 25%due
to BDT depreciation against value of USD. The Company has not yet fixed gas condensate suppliers. As per
management provided information, the Company would require working capital of BDT 3,087.7 million from the
first year of operation. The working capital will be needed for import condensate in form of non- funded facility.
Day- to- day operations would be hampered if the working capital management were in stuck.
Projects rated in this cohort have adequate capacity to meet financial commitments but more susceptible to adverse
economic conditions or changing circumstances. They are subject to moderate credit risk. Such rated projects
possess certain speculative characteristics.
Petromax Refinery Ltd.


CRAB I CRAB Ratings on Corporate Credit Digest I 29 January 2013
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CRAB RATING SCALES AND DEFINITIONS Long Term (Corporate)
Long Term Rating Definition
AAA
Triple A
Companies rated in this category have extremely strong capacity to meet financial
commitments. These companies are judged to be of the highest quality, with minimal
credit risk.
AA1, AA2, AA3*
Double A
Companies rated in this category have very strong capacity to meet financial
commitments. These companies are judged to be of very high quality, subject to very low
credit risk.
A1, A2, A3
Single A
Companies rated in this category have strong capacity to meet financial commitments,
but are susceptible to the adverse effects of changes in circumstances and economic
conditions. These companies are judged to be of high quality, subject to low credit risk.
BBB1, BBB2, BBB3
Triple B
Companies rated in this category have adequate capacity to meet financial commitments
but more susceptible to adverse economic conditions or changing circumstances. These
companies are subject to moderate credit risk. Such companies possess certain
speculative characteristics.
BB1, BB2, BB3
Double B
Companies rated in this category have inadequate capacity to meet financial
commitments. Have major ongoing uncertainties and exposure to adverse business,
financial, or economic conditions. These companies have speculative elements, subject to
substantial credit risk.
B1, B2, B3
Single B
Companies rated in this category have weak capacity to meet financial commitments.
These companies have speculative elements, subject to high credit risk.
CCC1, CCC2, CCC3
Triple C
Companies rated in this category have very weak capacity to meet financial obligations.
These companies have very weak standing and are subject to very high credit risk.
CC
Double C
Companies rated in this category have extremely weak capacity to meet financial
obligations. These companies are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
C
Single C
Companies rated in this category are highly vulnerable to non- payment, have payment
arrearages allowed by the terms of the documents, or subject of bankruptcy petition, but
have not experienced a payment default. Payments may have been suspended in
accordance with the instrument's terms. These companies are typically in default, with
little prospect for recovery of principal or interest.
D
(Default)
D rating will also be used upon the filing of a bankruptcy petition or similar action if
payments on an obligation are jeopardized.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1
indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid- range ranking;
and the modifier 3 indicates a ranking in the lower end of that generic rating category.




Petromax Refinery Ltd.


www.crab.com.bd; www.crabrating.com
Page 4 of 4
LONG-TERM RATING: LOANS/ FACILITIES FROM BANKS/ FIS
(All loans/ facilities with original maturity exceeding one year)
RATINGS DEFINITION
AAA (Lr)
(Triple A)
Highest Safety
Loans/ facilities rated AAA (Lr) are judged to offer the highest degree of safety, with regard to timely payment of
financial obligations. Any adverse changes in circumstances are unlikely to affect the payments on the loan facility.
AA (Lr)*
(Double A)
High Safety
Loans/ facilities rated AA (Lr) are judged to offer a high degree of safety, with regard to timely payment of financial
obligations. They differ only marginally in safety from AAA (Lr) rated facilities.
A (Lr)
Adequate Safety
Loan/ facilities rated A (Lr) are judged to offer an adequate degree of safety, with regard to timely payment of financial
obligations. However, changes in circumstances can adversely affect such issues more than those in the higher rating
categories.
BBB (Lr)
(Triple B)
Moderate Safety
Loans/ facilities rated BBB (Lr) are judged to offer moderate safety, with regard to timely payment of financial
obligations for the present; however, changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal than for issues in higher rating categories.
BB(Lr)
(Double B) Inadequate
Safety
Loans/ facilities rated BB (Lr) are judged to carry inadequate safety, with regard to timely payment of financial
obligations; they are less likely to default in the immediate future than instruments in lower rating categories, but an
adverse change in circumstances could lead to inadequate capacity to make payment on financial obligations.
B (Lr)
High Risk
Loans/ facilities rated B (Lr) are judged to have high risk of default; while currently financial obligations are met,
adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal.
CCC (Lr)
Very High Risk
Loans/ facilities rated CCC (Lr) are judged to have factors present that make them very highly vulnerable to default;
timely payment of financial obligations is possible only if favorable circumstances continue.
CC (Lr)
Extremely High Risk
Loans/ facilities rated CC (Lr) are judged to be extremely vulnerable to default; timely payment of financial obligations
is possible only through external support.
C (Lr)
Near to Default
Loans/ facilities rated C (Lr) are currently highly vulnerable to non- payment, having obligations with payment
arrearages allowed by the terms of the documents, or obligations that are subject of a bankruptcy petition or similar
action but have not experienced a payment default. C is typically in default, with little prospect for recovery of
principal or interest. C (Lr) are typically in default, with little prospect for recovery of principal or interest.
D (Lr)
Default
Loans/ facilities rated D (Lr) are in default or are expected to default on scheduled payment dates.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid- range ranking; and the modifier 3 indicates a ranking in
the lower end of that generic rating category.

SHORT- TERM CREDIT RATING: LOANS/ FACILITIES OF BANKS/ FIS
(All loans/ facilities with original maturity within one year)
DEFINITION
ST- 1
Highest Grade
This rating indicates that the degree of safety regarding timely payment on the loans/ facilities is very strong.
ST- 2
High Grade
This rating indicates that the degree of safety regarding timely payment on the loans/ facilities is strong; however, the
relative degree of safety is lower than that for issues rated higher.
ST- 3
Adequate Grade
This rating indicates that the degree of safety regarding timely payment on the loans/ facilities is adequate; however, the
issues are more vulnerable to the adverse effects of changing circumstances than issues rated in the two higher
categories.
ST- 4
Marginal
This rating indicates that the degree of safety regarding timely payment on the loans/ facilities is marginal; and the
issues are quite vulnerable to the adverse effects of changing circumstances.
ST- 5
Inadequate Grade
This rating indicates that the degree of safety regarding timely payment on the loans/ facilities is minimal, and it is likely
to be adversely affected by short- term adversity or less favorable conditions.
ST- 6
Lowest Grade
This rating indicates that the loans/ facilities are expected to be in default on maturity or is in default.


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