Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the entity ratings of MAL Pakistan Limited, highlighting the company's robust market presence and strategic growth plans. Key factors contributing to this decision include MAL's strategic partnerships, increased revenue, and improved profitability margins. The company's strong governance and support from its sponsor, Army Welfare Trust, further bolster its position in the competitive lubricant market.
According to PACRA, MAL Pakistan Limited, initially formed as Mobil Askari Lubricants Limited through a partnership between Mobil International Petroleum Corporation and Army Welfare Trust, has fully transitioned to MAL Pakistan Limited after a complete acquisition by the Trust in 2007. The company has sustained its growth momentum, reporting a 13.3% revenue increase to PKR 10.8 billion in CY25, driven by higher sales volumes. The company’s operational margins have improved, with a gross profit margin of 16.9% and a net profit margin of 2.7%, attributed to an optimized product mix and reduced financing costs.
Despite economic challenges and competition, MAL maintains a strong foothold in Pakistan's lubricant market, valued at approximately PKR 230 billion. The company's strategic initiatives include relocating its blending facility to the Korangi Creek Industrial Park Special Economic Zone for increased efficiency and tax benefits, expanding chemical storage infrastructure, and establishing a mining-focused lubricant subsidiary to tap into emerging opportunities. These efforts are critical for sustaining revenue growth and profitability amid fluctuating oil prices and macroeconomic conditions.
The maintenance of favorable ratings is contingent upon MAL's ability to execute expansion projects effectively, manage working capital prudently, and sustain adequate cash flow coverage. The company's financial risk profile remains adequate, with a leverage ratio of 53.5%, primarily due to short-term working capital borrowings. While the net working capital cycle extended to 84 days, liquidity is supported by improved operating cash flows and sufficient banking facilities.