Press Release

VIS Reaffirms Entity Ratings of Zoom Marketing Oils (Pvt.) Limited

Karachi, Dec 12, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Zoom Marketing Oils (Pvt.) Limited (ZMOPL) at ‘BBB-/A-3’ (Triple B Minus/A-Three). The medium to long-term rating of ‘BBB-’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-3’ denotes satisfactory liquidity and other protection factors which qualify entities/issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 7, 2021.

ZMOPL is an emerging Oil Marketing Company (OMC), primarily involved in sales and marketing of High Speed Diesel (HSD), Premier Motor Gasoline (PMG) and lubricants. The ratings incorporate higher business risk for the industry players, largely emanating from operating on moderate level of fixed commission and significant exposure to foreign exchange movements from sizeable dependence of OMCs on imports. The financial risk of the sector is relatively higher as the companies have to rely heavily on short-term borrowings to meet their working capital requirements.

During FY22, the company reported healthy growth in topline on account of increase in average prices and volumetric sale of its key products. ZMOPL was able to sustain its gross margins as the government provided price differential claim (PDC) to OMCs and refineries in order to subsidize for the cost to keep fuel prices unchanged. Other income increased mainly due to higher rental income from freight infrastructure, hospitality income from new storage capacity, and interest income on loans to related parties. However, the net profitability and margins remained thin mainly owing to hefty forex losses. Overall cash flow position remained under stress. The company has shorter working capital cycle relative to industry’s median. Albeit the sponsors have injected additional equity, over the period of last two years, gearing has remained relatively higher due to elevated short-term borrowings. The company has constructed an oil storage depot at Machikay, which has been majorly financed through equity; the storage depot has been operational since Mar’22.
The management expects improvement in its profitability indicators in view of certain government initiatives despite some slowdown in demand ensuing from recent floods and political instability during the ongoing year. Going forward, topline of the company is expected to grow primarily on the back of higher offtake of its products led by expansion in the scale of operations. The implementation of higher OMC margin as approved by Economic Coordination Committee (ECC) is expected to bode well for the entire industry. The ratings will remain dependent on improvement in sector dynamics, capitalization and liquidity profile along with the achievement of projected sales.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (August 2021)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .