Press Release

VIS Reaffirms Entity Rating of Madina (Pvt.) Limited

Karachi, July 30, 2024 : VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Madina (Pvt.) Limited (MPL) at ‘BBB/A-2’ (Triple B/ A-Two). The medium to long-term rating of ‘BBB’ signifies adequate credit quality & sufficient and reasonable protection factors. Risk factors are considered variable if changes occur in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity factors and company fundamentals. Access to capital markets is good and risk factors are small. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 23, 2023.

Madina (Pvt.) Limited (MPL) is part of Madina Group, which was founded in 1946 and includes business interests in various sectors including edible oil, sugar, ethanol, detergent, plastics, power generation, steel, and mass media. MPL is involved in the manufacturing and sale of banaspati ghee, cooking oil, and allied products. The Company sells its products under the brand name of ‘Rabi’ and ‘Rajhee’. The total installed capacity of the Company is 125,000 M.Ton.

The assigned rating incorporates high business risk profile of the edible oil industry given heavy reliance on imported raw material, fragmented market, low value addition & switching cost and thin margins. In 2023, the Company’s topline growth was driven by higher prices, despite a significant decline in volumes. The low offtake was a result of high product prices, which persisted for an extended time due to high-cost inventories, despite declining international commodity prices. Consequently, gross margins also improved which helped sustain net margins. Slower offtake resulted in higher working capital requirements, leading to increase in leverage and gearing. Liquidity profile remained adequate; however, recovery of sales tax will remain important for easing liquidity pressures. The coverage profile of the Company remained sufficient and expected to improve gradually. In FY24, amidst declining prices and lower offtake, maintaining financial risk profile will remain important for ratings.

For further information on this rating announcement at (021) 35311861-66 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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright July 30, 2024 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.