Press Release

VIS Reaffirmed Entity Ratings of Zoom Petroleum (Private) Limited

Karachi, April 17, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Zoom Petroleum (Private) Limited (‘ZPPL’ 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 ‘Stable’. Previous Rating action was announced on February 28, 2024.

ZPPL as an Oil Marketing Company (OMC), has been in the business of trading petroleum products for more than fifteen years and operates under the brand name ‘Zoom’. The brand and storage infrastructure are shared with the larger sister concern, Zoom Marketing Oils (Pvt.) Limited. ZPPL’s product range includes motor spirit (petrol), diesel, furnace oil, kerosene and lubricants. Motor spirit is the largest revenue driver as the product constitutes around 66% of total sales. The Company currently has 43 outlets in the major cities of Punjab, including 8 Company operated. The Company has no plans of expansion of retail outlets over the rating horizon. The Company has been granted a provisional license up to December 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 consider the relatively smaller size and the financial risk profile of the Company. Profitability indicators showed some improvement supported by inventory management practices, which contributed to margin enhancement despite overall volume contraction. Sales volumes were influenced by management decisions to limit procurement in anticipation of inventory losses. Capitalization indicators reflected an increase in equity and a decline in borrowings, contributing to an improved gearing profile. Liquidity remained constrained due to pressure on funds from operations, despite a reduction in finance costs following monetary easing. The current ratio remained at similar levels to the previous year. Coverage indicators improved due to operational gains and the absence of long-term debt, with the debt service coverage ratio showing upward movement during the period.

Going forward, ratings will remain sensitive to developments in the regulatory environment, movements in international oil prices, exchange rate trends, and domestic economic performance as well as conversion of the provisional license. The ability to sustain profitability amid demand fluctuations and manage liquidity pressures will be important. Maintenance of capitalization and coverage indicators at current levels will be monitored. Strategic decisions by management regarding inventory procurement and sales mix adjustments will continue to influence financial performance and ratings trajectory. Moreover, dependence on its sister concern, Zoom Marketing Oils (Private) Limited for branding and infrastructure will also remain a key rating consideration.

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

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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .