Press Release
VIS Reaffirms Entity Ratings of Faisalabad Oil Refinery (Pvt.) Limited
Karachi, September 16, 2025: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Faisalabad Oil Refinery (Pvt.) Limited (‘FORL’ or ‘the Company’) at ‘A-/A2’ (Single A Minus/ A Two). The medium to long-term rating of ‘A-’ signifies good credit quality and adequate protection factors. Risk factors may vary with possible changes in economy. The short-term rating of ‘A2’ denotes good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on August 16, 2024.
FORL, the part of Madina Group, was incorporated in 1986, The principal activity of the Company is manufacturing, and sale of vanaspati ghee, cooking oil, spices, water and by products. The Company is selling their brand under the name of ‘Kisan’, ‘Data’, Sartaj’ and ‘Taiba’ all over Pakistan. The power requirement of the Company is primarily met through self-generation. In FY24, the Company has installed solar panels with a power generation capacity of 642 KW for power backup and cost efficiency. The Company is also expanding its storage capacity in Karachi.
Assigned ratings reflect high business risk of the edible oil industry, due to its dependence on imported raw materials, a lag in pass-through of costs to consumers, low entry barriers, and dominance of major players, making pricing strategy a challenge for smaller entities.
Ratings also incorporate the Company’s financial risk profile. Topline witnessed contraction in FY24 and 9MFY25, primarily due to lower volumetric offtake and price. On the other hand, gross margins have shown consistent improvement, supported by relatively favorable selling prices vis-à-vis raw material costs. Net margins of the Company remained stable in FY24, despite higher finance cost on the back of increase in profit from associate along with lower effective tax rate, and improved subsequently in 9MFY25 mainly due to lower financial charges; an outcome of lower borrowings and monetary easing. While the equity base of the Company declined following the transfer of its shareholding in Madina Sugar Mills through a gift deed, the capitalization profile remains adequate. With improved profitability, and slight recovery in tax refunds, debt coverage metrics depicted enhancement during 9MFY25. Liquidity profile remains adequate, while sales tax refunds continue to be a constraint. Going forward, maintenance of profitability, low leveraged capital structure, and debt coverages will be important parameters for ratings.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf