PACRA maintains Entity ratings of Mehmooda Maqbool Mills Limited

Mehmooda Maqbool Mills Limited (“MMML” or “the Company”) is a prominent participant in Pakistan’s edible oil sector, supported by its established association with a textile sector entity, diversified operations, and the continued backing of its sponsoring family. The assigned ratings are further underpinned by the Company’s presence across multiple business segments and the extensive experience of its sponsors in the edible oil and agriculture sectors, which provides operational diversification and partially mitigates concentration risk. MMML benefits from a long operating history, an experienced management team, and professional oversight of day-to-day operations. Over time, the Company has strengthened its market position through an expanded customer base and broader geographical outreach. The operating environment for Pakistan’s edible oil sector remains challenging, as approximately 90% of domestic edible oil requirements are met through imports—predominantly palm oil—while local production accounts for only around 10%. The sector remains exposed to volatile global commodity prices, elevated import dependency, and exchange rate fluctuations. Against this backdrop, the Company demonstrated operational resilience during FY25. Revenue improved, primarily driven by higher sales across core product lines, supported by relatively better demand conditions compared to the previous year. Despite the improvement in topline performance, gross margins remained under pressure due to elevated raw material costs and intense competition in the local market. However, the adverse impact on profitability was partially offset by a decline in finance costs, primarily due to lower borrowing rate, resulting in an improvement in net profitability. Consequently, the Company reported higher profit after tax compared to FY24. From a financial risk perspective, MMML remains highly leveraged, with short-term borrowings constituting a sizable portion of the overall debt profile. Nonetheless, coverage indicators exhibited relative improvement; however, they remain sensitive to margin volatility. The ratings also factor in the demonstrated support of the sponsoring family, which has historically shown a strong commitment to the business and provides comfort during periods of financial stress. Going forward, the ratings will remain contingent upon the Company’s ability to sustain business volumes, preserve margins amid raw material price volatility, and gradually rationalize leverage, while maintaining adequate liquidity buffers.
The ratings are dependent on the management's ability to maintain growth in business volumes while sustaining margins and profitability. Prudent management of leveraged capital structure is crucial. Effective changes in governance framework would be beneficial for the ratings.

About the Entity
Mehmooda Maqbool Mills Limited was incorporated in 1968 and is principally engaged in solvent extraction from oilseeds, oil and ghee refining, and flour milling. The Company operates solvent extraction units with a combined installed capacity of 400 MT/day, an oil refining unit with a capacity of 72 MT/day, a flour mill with total capacity of 240 MT/day, and a ghee mill with a refining capacity of 100 MT/day. The Board is dominated by the sponsoring family and is chaired by Mr. Tanvir Ahmad Sheikh, while Mr. Mian Bakhtawar Tanvir Sheikh serves as the Chief Executive Officer.