Karachi, April 08, 2020 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Faisalabad Oil Refinery (Pvt.) Limited (FORL) at ‘BBB+/A-2’ (Triple B Plus/A-Two). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality with reasonable protection factors. Moreover, risk factors may vary with possible changes in 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’. The previous rating action was announced on June 28, 2019.
The ratings assigned to FORL take into account its association with Madinah Group, having business stake in various sectors encompassing edible oils, sugar, ethanol, power generation, mass media and steel. The assigned ratings reflect stable business model, positive trajectory of sales and sound liquidity profile. Furthermore, ratings draw comfort from integrated production facility, profound distribution network along with well-established brand. Minimal reliance of the company on long term financing, adequate coverages and positive demand prospects of edible oil have also provided strength to the business. However, the ratings are constrained due to suppressed margins and highly price sensitive import market of raw material.
Oil and ghee industry, being a consumer goods industry supplying essential food items, is expected to be least impacted by the ongoing Covid pandemic crisis. Although product movement has been allowed, some supply chain issues may be faced in case lockdown is extended. Also a slowdown in receivable collection is expected. The ratings would remain dependent on the timing of lifting of lockdown, longer duration thereof may have an impact on ratings, going forward.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan