Press Release

VIS Reaffirms Entity Rating of Madina (Pvt.) Limited

Karachi, June 23, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Madina (Pvt.) Limited (MPL) at ‘BBB/A-2’ (Triple B/ A-Two). The medium to long-term rating of ‘BBB’ signifies adequate credit quality & sufficient and reasonable protection factors. Risk factors are considered variable if changes occur in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity factors and company fundamentals. Access to capital markets is good and risk factors are small. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 13, 2022.

Madina (Pvt.) Limited (MPL) is a part of Madinah Group of Industries having business interest in various sectors including edible oil, sugar, ethanol, detergent, plastics, power generation, steel, and mass media. The group is family owned that has over five decades of business experience. MPL is involved in the manufacturing and sale of banaspati ghee, cooking oil, and allied products. Ratings factor in rich experience of the sponsors in the edible oil industry benefiting the Company in terms of long-standing relationships with the distributors and an established procurement network.

The assigned rating incorporates high business risk profile of the edible oil industry given heavy reliance on imported raw material, fragmented market, low value addition & switching cost and thin margins. While industry demand remain stable with edible oil being a staple product, changes in raw material prices and foreign exchange rate fluctuations are key risk factors resulting in volatility in margins.

Financial assessment of the Company reflects strong growth in topline, pressure on margins, moderate cash flow coverages against outstanding obligations and a leveraged capitalization profile. Significant topline growth in the review period is on account of full year operations of the plant supported by elevated selling expenses. Management expects sales revenue to increase in view of gradual ease in LC constraints over the remaining part of the ongoing fiscal year. Margins remain under pressure due to currency devaluation, high input costs and elevated financial costs. The company also plans to install solar power production panels, which is expected to provide cost efficiencies over the rating horizon. Cash flow coverages against outstanding obligations as evident from FFO to Total Debt remains moderate; however room for improvement exists in improving short-term borrowing coverage that was reported below the minimum threshold at 84% at end-Mar’23. On the capitalisation front, gearing levels have increased due to higher short-term borrowing employed to fund higher production levels. Given no plans to hire additional debt for expansion, capitalization indicators are expected to gradually improve over the rating horizon. However, given the challenging market dynamics and pressure on margins, maintaining financial risk profile over the rating horizon will remain critical for ratings.

For further information on this rating announcement, please contact Ms. Asfia Amanullah (Ext: 212) or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Corporates (May 2023)

VIS Issue/Issuer Rating Scale:

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