Press Release
VIS Reaffirmed Entity Ratings of Madina Oil Refinery Limited
Karachi, August 18, 2026: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of Madina Oil Refinery Limited (‘MORL’ 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' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Risk factors are small. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on June 24, 2025.
MORL was incorporated in Pakistan in 2020 as a private limited company and was subsequently converted into a public unlisted company in 2021. The Company is principally engaged in the manufacturing and sale of banaspati ghee, cooking oil, and related by-products. MORL also holds a 12.62% equity stake in its associated company, Madina Sugar Mills Limited. The registered office of the Company is located in Sindh, while its head office and manufacturing facility are situated in Faisalabad. The Company is currently in the process of relocating its production facilities to Karachi.
Assigned ratings reflect high business risk of the edible oil industry primarily due to cost volatility of raw materials which are mainly imported, a lag in pass-through of costs to consumers, low entry barriers, and dominance of major players, making pricing control a challenge for smaller entities. As a consequence, profitability margins vary significantly from year to year.
The capitalization profile of the Company remains adequate, and debt coverage metrics continue to remain healthy. However, the liquidity profile reflects a maturity mismatch, with short-term borrowings partly financing capital expenditure, which the management expects to resolve over the near term through internal cash generation. Inventory levels increased significantly during 9MFY26 as management accumulated raw materials in anticipation of higher international prices amid the Middle East conflict. Going forward, sustained growth in revenue and profitability (especially through efficiencies generated from the ongoing plant relocation from Faisalabad to Karachi), improvement in the liquidity and capitalization profiles, and maintenance of healthy debt coverage metrics will remain important for the ratings.
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