Press Release

VIS Assigns Initial Ratings to Madina (Pvt.) Limited

Karachi, June 13, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB/A-2’ (Triple B/A-Two) to Madina (Pvt.) Limited (MPL). 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-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

MPL is a part of Madinah Group having business interest in various sectors including edible oil, sugar, ethanol, detergent, plastics, power generation, steel, and mass media. The sponsors having rich experience of the edible oil industry that leads to long-standing relationships with the distributors and an established procurement network. MPL is involved in the manufacturing and sale of banaspati ghee, cooking oil, and allied products. The company became operational in February’21 with an installed refining and extraction capacities of 350 MT each per day.

Given full half year operations with higher quantity and average prices of major products, net sales improved considerably during HY22. Around 70% of sales are generated from branded products while the rest comprises bulk sales. The company has introduced both premium and lower end brands in the market. Banaspati ghee comprises more than three fourth of total sales while ghee plus cooking oil comprises above 90% of gross sales. MPL’s gross margins are largely in line with peer companies while net margins are higher mainly due to tax exemption during initial 5 years of operations. Liquidity profile of the company is sound in line with already zero reliance on long-term borrowings. Coverages remained adequate. To meet higher working capital requirements emanating from high raw material inventory, short-term borrowings increased leading to higher leverage indicators by end-HY22. The management plans to finance planned capex through internal sources and loan from directors. Gearing and debt leverage are projected to improve considerably, going forward. The ratings will remain sensitive to increase in revenue and margins, while maintaining sound coverages and decreasing gearing as per projections.

For further information on this rating announcement, please contact Mr. Maimoon Rasheed at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria: Corporates (August 2021)

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