Press Release

VIS Assigns Initial Entity Rating to Gamalux Oleochemicals Limited

Karachi, July 12, 2023: VIS Credit Rating Company Limited (VIS) has assigned initial entity rating of ‘A-/A-2’ (Single A Minus/ A-Two) to Gamalux Oleochemicals Limited (GOL). The medium to long-term rating of ‘A-’ signifies good credit quality and adequate protection factors. Risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.

Gamalux Oleochemicals Limited (GOL), incorporated in 2000, operates a vertically integrated oleo chemicals manufacturing facility capable of producing Distilled Fatty Acid (DFA), Soap Noodles, Laundry Soap and Beauty Soap. Shareholding pattern of the company is vested between the Ahmed Family and a Malaysian company wherein Ahmed Family has controlling stake with minority stake resting with Malaysian investors. GOL’s manufacturing facility is located at Bin Qasim, Karachi.

The ratings incorporate the business risk profile which is supported by growing demand of beauty soap and soap noodles (comprising around 73% of sales revenue in FY22), and favorable population demographics. However, key sector risks including exchange rate volatility, supply chain uncertainties and growing competition continue to prevail. Nevertheless, ratings derive comfort from the broad product portfolio in the soap segment.

Ratings factor in growth in capacity utilization levels supported by stable demand growth emanating from B2B and B2C customer base.. Financial assessment of the Company reflects strong growth in topline, healthy margins, sufficient cash flow coverages against outstanding obligations and improved capitalization ratios. The Company’s revenue base has depicted healthy year on year growth during the last three years (FY20-FY22) on account of higher aggregate turnover along with increased average selling prices. Margins have also improved over the past three years on the back of inventory gains, with some reduction in the ongoing year owing to challenging macroeconomic environment and elevated finance costs. Nevertheless, they remain healthy due to greater proportion of high value products- soap noodles and beauty soap. Equity base of the Company grew on the back of prudent profit retention and equity injection from sponsors, which was utilized to meet working capital needs; hence keeping overall debt levels unchanged. Leverage and gearing levels have showcased improvement on a timeline basis. Further support is garnered from limited debt drawdown plans over the rating horizon. Ratings remain dependent on maintenance of financial risk indicators in line with benchmarks for the assigned ratings.

For further information on this rating announcement, please contact Ms. Asfia Amanullah (Ext: 212) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

Applicable Rating Criteria: Corporates (May 2023)

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