Karachi, November 12, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Olympia Oils (Pvt.) Limited (OOL) to ‘A-/A-2’ (Single A Minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate meanwhile risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment with sound liquidity and company fundamentals. Access to capital markets is good along with low risk factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on September 17, 2020.
OOL is primarily engaged in the production and sales of edible oil and oil meal using solvent extraction process. OOL is the flagship company of a diversified industrial conglomerate “Monnoo Group” having business interests in textile, carpets, chemicals, synthetics, and poultry. The ratings draw strength from moderate business risk profile based on around 85.7% bulk sales to institutional clients thereby avoiding competition from mainstream branded oil market. The ratings incorporate relatively lower demand risk of oil meal due to vertical integration with group owned feed mills which on an average utilize about 30-40% (FY19: 50%) of output.
Upward revision in rating is reflective of the increasing trend in sales revenue, profitability and improvement in capitalization indicators on a timeline basis. The ratings also draw comfort from minimal reliance on long-term borrowings and adequate debt service coverage. Equity base of the company is supplemented by equity injection in the form of interest free unsecured loan from directors and profit retention. Given growth in equity base through higher profit retention, gearing and leverage indicators improved at end-FY21.
As per management, leverage indicators are expected to remain moderate due to reliance only on short-term borrowing for working capital requirements with no plans of mobilizing long term debt, going forward. The ratings take into account the price sensitivity of imported raw material and exchange rate fluctuations and the competitive landscape of the industry. The ratings would remain dependent on maintaining profitability and liquidity indicators and improving capitalization strength, 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
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/