Press Release
VIS Reaffirms Entity Ratings of Gamalux Oleochemicals Limited
Karachi, August 26, 2024: VIS Credit Rating Company Limited (‘VIS’) reaffirmed entity ratings of Gamalux Oleochemicals Limited ('GOL’ or 'the Company’) at 'A-/A-2' (‘Single A minus/A-Two’). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A-2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remain ‘Stable’. Previous Rating action was announced on July 12, 2023.
GOL was established in 2000 as a Private Limited Company. In May 2021, it transitioned into a Public Limited Company (Unlisted). The Company's primary operations involve managing and running facilities for oleochemicals production, distillation, and soap manufacturing for sale to bulk buyers and retailers. GOL supplies raw materials to soap manufacturers (B2B), produces its own consumer products namely beauty and laundry soap (B2C), and undertakes toll manufacturing. Additionally, it exports its products to UAE and Uzbekistan.
Assigned ratings take into account the business risk profile of the chemical industry, characterized by medium cyclicality and low competition. The chemical sector benefits from demand that is driven by various industries such as plastics, paints, paper, leather, soaps, detergents, shampoos, and textiles. Additionally, the industry's susceptibility to exchange rate fluctuations is recognized, influenced by a significant import component of raw materials.
Assigned ratings also consider the comprehensive financial profile encompassing profitability, capitalization, liquidity, and coverage profiles. Profitability is supported by forward integration of the Company with value-added products that support stable demand and margins. Capitalization has shown improvement due to profit retention and paid-up capital additions. Liquidity remains adequate with a maintained current ratio. The coverage profile, while showing a recent decline, remains commensurate with assigned ratings.
Going forward, ratings will be sensitive to the Company's ability to manage volatility in raw material costs arising from the exchange rate fluctuations. Maintenance of capitalization and liquidity profiles, in line with the assigned ratings, will also remain important for future reviews.
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