Press Release
VIS Reaffirms Entity Ratings of Servo Motor Oil (Private) Limited
Karachi, May 21, 2026: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Servo Motor Oil (Private) Limited (“SMOPL” 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 'A2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous ratings action was announced on December 19, 2024.
SMOPL, a part of the Chicago Group (CG) of Companies, was incorporated in Pakistan on June 05, 2008, as a private limited company with its registered office and manufacturing plant located in Multan, Pakistan. The Company is principally involved in manufacturing and sales of Blended Lubricating Oil and Greases. The Company operates 50 warehouses across Pakistan and caters to the tractor and motorcycle segments of the automobile industry, operating through a retail customer model.
The ratings reflect the Company’s association with the Chicago Group and its competitive position in the industry. Business risk profile remains constrained by higher competition, limited pricing power, and exposure to macroeconomic pressures, including weak demand and reliance on imported inputs. In FY25, net sales declined by ~13% to PKR 2.78bn, driven by lower selling prices and continued volumetric pressure amid subdued demand. Despite the contraction, margins improved, with gross and net margins rose indicating improved cost management. The financial risk profile has come under pressure, with increased reliance on short-term borrowings to fund working capital needs, resulting in higher gearing and leverage. Liquidity indicators have moderated while debt servicing remains adequate. Going forward, ratings remain sensitive to Company’s ability to improve volumetric growth, manage working capital efficiently, and contain leverage while sustaining margins in a competitive and evolving operating environment.
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