Press Release

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

Karachi, April 17, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Zoom Marketing Oils (Pvt.) Limited (“ZMOPL” or “the Company”) at ‘BBB-/A3 (“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 'A3' indicates fair likelihood of timely repayment of short-term debt obligations with satisfactory liquidity factors. Outlook on the assigned ratings is ‘Positive’. Previous Rating action was announced on February 27, 2024.

ZMOPL 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 motor spirit (petrol), diesel, furnace oil, kerosene and lubricants. The Company operates under the license granted by Oil and Gas Regulatory Authority (OGRA). Currently, the Company boasts a cumulative storage capacity of around 33,000 metric tons in Punjab. In the lubricants segment, the Company has launched its proprietary brand, "Thrill Lubricant," alongside its existing "Zoom Oil" brand. Currently, ZMOPL operates a retail network of 200 fuel outlets, primarily concentrated in Punjab, of which 20 are directly managed by the Company and the rest are franchisees. Management has indicated plans to increase the number of operational retail outlets to 250 by end-of-2025.

Assigned ratings take into account the high business risk profile of Pakistan’s oil and gas marketing sector, which is influenced by regulatory oversight, currency volatility, international oil price fluctuations, and economic conditions. The sector operates under a pricing mechanism regulated by the Oil and Gas Regulatory Authority for major products, limiting margin flexibility and exposing companies to inventory pricing risks due to lagged price adjustments. The sector remains capital intensive, requiring ongoing investments in infrastructure and technology, which can strain financial flexibility during periods of reduced demand or profitability. Sales volumes have been affected by industry-wide developments such as high petroleum prices, lower economic activity, and reduced demand for furnace oil due to a shift toward alternative energy sources. Exposure to international energy markets and currency depreciation has further impacted cost structures.

Assigned ratings also take into account the financial risk profile of the Company. Profitability trends remained mixed during the period, with an increase in overall volumes and average fuel prices supporting gross revenue. Despite margin compression from inventory losses, margins were sustained due to an upward revision in allowed Oil Marketing Company margins. Net profitability remained positive for the fiscal year but turned negative in the subsequent half-year due to higher tax expenses and increased financial charges due to higher borrowings. Capital structure indicators reflected a decline in gearing during the year following receipt of dues from an associated party, though short-term borrowing requirements increased subsequently due to working capital needs. Liquidity indicators improved modestly but remained below benchmark levels. Coverage indicators showed improvement in the fiscal year under review, supported by operational cash flows, although some weakening was noted thereafter due to increased financial obligations and equity erosion.

Going forward, ratings will remain sensitive to the Company’s ability to manage demand volatility, restore profitability within regulated margin structures, and navigate fluctuations in international oil prices and exchange rates. The impact of ongoing expansion and the conversion of the provisional license will also be important. Continued management of working capital cycles and control over short-term borrowing levels will remain key considerations for the capitalization profile. Sustainability of liquidity and coverage metrics amid evolving cost structures and sector dynamics will also be important considerations.

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

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