Press Release

VIS Maintains Entity Ratings of Zoom Marketing Oils (Private) Limited

Karachi, February 27, 2024: VIS Credit Rating Company Limited (‘VIS’) has maintained entity ratings of Zoom Marketing Oils (Private) Limited (‘ZMOPL’ or ‘the Company’) at 'BBB-/A-3' (‘Triple B minus’/’A-Three’). 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-3' indicates satisfactory liquidity and other protection factors qualify entities as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings have been changed from ‘Stable’ to ‘Positive’. Previous rating action was announced on December 12, 2022.

Zoom Marketing Oils (Pvt.) Limited was incorporated in Pakistan on January 9, 2015, as a private limited company in Lahore. The Company is principally engaged in procurement, storage, and marketing of petroleum related products namely High-Speed Diesel (HSD), Premier Motor Gasoline (PMG), and various lubricants. The Company operates under the license granted by the Oil and Gas Regulatory Authority (OGRA). Currently, the company boasts a cumulative storage capacity of 30,769 metric tons in Punjab, distributed across two locations: Pattoki Depot, District Kasur, and Machikay Depot, District Sheikhupura.

Assigned ratings incorporate the heightened business risk profile of ZMOPL, characterized by its susceptibility to macroeconomic conditions and exposure to foreign exchange fluctuations. The decline in Pakistan's petroleum product sales, attributed to sluggish industrial activity, reduced local transport fuel consumption, weak auto sales, and high product prices, has contributed to a challenging environment. The scarcity of foreign exchange for importing raw materials and currency devaluation further impacted the industry, leading to a significant reduction in petroleum product consumption.

Assigned ratings also consider the financial risk profile of the Company. The profitability profile is affected by volume decline, offset by a price increase strategy, resulting in a revenue increase. Operating profitability faced challenges from currency volatility, reflected in FX losses and high administrative costs. Net profitability was supported by other income, primarily from markup on related party advances. The margin uptick, driven by government OMC margin increases and retail outlet expansion, is expected to improve operational efficiencies. Liquidity metrics and coverages remained constrained. Projected improvement in the same, particularly, recovery of advances to associated concerns will remain important for augmenting liquidity of the Company.

Change in outlook is underpinned by the improvement noted in the capitalization profile. This improvement is attributed to capital injection and the optimization of working capital facilities. Part receipt of advances from related party was directed towards reduction in working capital facilities which facilitated improvement in gearing and leverage ratios. Maintaining low gearing and leverage levels remains important for financial risk profile of the Company. Going forward, improvement in ratings will remain sensitive to continued improvement in performance in accordance with the projected plans of the Company.

For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 201) at 021-35311861-64 or email at info@vis.com.pk.



Sara Ahmed
Director

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .