Press Release

VIS Upgrades Entity Ratings of Madina Oil Refinery Limited

Karachi, April 9, 2024: VIS Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of Madina Oil Refinery Limited (MORL) to 'BBB/A-2' (‘Triple B /A-Two’) from ‘BBB-/A-2’ (‘Triple B Minus/A-Two’). 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 'A-2' indicates 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 rating is ‘Stable’. Previous Rating action was announced on February 20,2023.

MORL is involved in the edible oil refining business. It is part of the ‘Madinah Group’ having diversified business interests including sugar, ethanol, edible oil & vanaspati ghee, power generation, steel and mass media. The Company has recently expanded its operations by installation of a solvent extraction plant with the installed capacity of crushing seed 300 MT per day. In addition, the Company has set up refining capacity of 160MT/per day for canola oil that became operational in the current year. The Company sells its products under the brands of ‘Zaavi’ , ‘Khushroz’ and ‘Kaif’.

Assigned ratings incorporate the high business risk profile of the edible oil sector, characterized by heavy reliance on imported raw material, fragmented market, low value addition and switching cost along with thin sector margins. Rating revision takes into account improvement in profitability and capitalization profile. During the year, while volumes registered a decline year over year, price increase largely compensated for the volume loss, thereby keeping revenues fairly stable. However, with the backward integration into the crushing plant and higher meal prices in the market, gross margins of the Company recorded a notable improvement, boosting overall profitability profile. Consequently, capitalization profile also noted favorable metrics on the back of improved profitability and profit retention. Gearing and leverage indicators depicted a decline. Coverages also remained comfortable. However, liquidity metrics remain adequate. Diversion of operational flows towards a sizeable investment in related party shares during the year has constrained the liquidity profile of the Company, leading to reliance on short-term borrowings to bridge the gap. Going forward, recoupment of these funds will remain important for overall liquidity and capitalization profile of the Company.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria:
Industrial Corporates
VIS Issue/Issuer Rating Scale

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