Press Release
VIS Reaffirms Entity Ratings of Madina (Pvt.) Limited
Karachi, September 03, 2025: VIS Credit Rating Company Limited (‘VIS’) reaffirms Entity Ratings of Madina (Pvt) Limited (‘MPL’ or ‘the Company’) at 'BBB/A2' (‘Triple B/’A Two’). Medium to long term rating of ‘BBB’ indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur 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 is ‘Stable’. Previous rating action was announced on July 30, 2024.
MPL was incorporated in January 2020 and commenced operations February’21. MPL is involved in the manufacturing and sale of banaspati ghee, cooking oil, and allied products. The total installed capacity of the Company is 125,000 M.Ton per annum, translating into approximately 350 MT per day. Power requirement of the manufacturing units is 3MW, which is met through a combination of grid-based power, diesel and gas generators and solar power. The facility has K-Electric connection of 1MW alongside steam turbine generator of 3MW and has also installed solar power of 3MW in FY24. The factory and registered office of the Company is situated in Sindh, Karachi while the head office is located in Faisalabad.
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.
The ratings also incorporate the Company’s financial risk profile. The Company’s topline witnessed contraction in FY24, which subsequently improved in 9MFY25, albeit, it remained below FY23 levels. Gross margins have shown consistent improvement. While net margins declined in FY24 due to elevated financial charges, though it recovered in 9MFY25 amid monetary easing. The capital structure is considered adequate, with sizeable short-term borrowings to support working capital requirements and no long-term debt on the books. Improved profitability, lower financial charges, and tax refunds contributed to sound debt coverage metrics. Liquidity profile remains adequate, with comfort drawn from related party support in the form of cross corporate guarantees facilitating banking arrangements.
For further information on this rating announcement, please contact at 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