Press Release

VIS Maintains Rating of Faisalabad Oil Refinery (Pvt.) Limited

Karachi, April 12, 2021: VIS Credit Rating Company Limited (VIS) has maintained 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 has been changed to ‘Positive’ from ‘Stable’. The previous rating action was announced on April 08, 2020.

Ratings draw comfort from the improvement in sales and profitability indicators on a timeline basis. During FY20, topline posted growth of 6.2% on the back of increase in selling prices by 21%, although volumes exhibited a dip of 4%. Despite stabilization in volumes during H1’FY21, increased selling prices are expected to continue supporting the topline over the rating horizon. Net margins also registered an increase of 1% during FY20 despite increase in financial charges on account of higher debt utilization. Going forward, the company is expecting further improvement in margins due to strategic inventory planning.

The assigned ratings incorporate association with Madinah Group, having business stake in various sectors, an integrated production facility, well-established brand and support of investment income. The company is currently undertaking capital expenditure to further improve operational efficiencies and lower costs. As a result, cash flow coverage and capitalization indicators are expected to remain under pressure on account of financial obligations, albeit within manageable levels. However, highly fragmented industry structure, exposure to exchange rate risk on the back of heavy reliance on imports, and volatility in international commodity prices will continue to constrain ratings.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext. 207) and/or the undersigned at 021-35311861-66 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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