PACRA Upgrades Entity Ratings of Pakistan Oil Mills (Pvt.) Limited

The rating upgrade of Pakistan Oil Mills (Pvt.) Limited's (or 'the Company') is underpinned by a sustained volumetric growth trajectory, improved capacity utilization, and strengthening debt coverage indicators, supported by strategic operational efficiencies and a broadened institutional client base. This has translated into a significant topline expansion, with revenue growth reflecting higher sales volumes and increased penetration of its diversified product portfolio, including edible oil/ghee brands (Naz, Pak, Sun, Pure), canola meal, and by-products. During FY25, the Company's topline grew robustly by 25.5% to PKR 25,809mln (FY24: PKR 20,569mln), driven by higher crushing volumes and improved capacity utilization of 48.3% (FY24: 36.3%), alongside a shift in sales mix towards a strengthened institutional client base, which has enhanced revenue visibility. This positive revenue trajectory continued into 9MFY26, with the Company recording sales of PKR 19,899mln. The growth in volumes and revenue is also reflected in profitability metrics. While margins experienced pressure during FY25 due to elevated raw material costs, recovery trends have emerged in the ongoing period, supported by better input cost management and operational efficiencies. A key contributor to margin improvement is the installation of 2 MW solar power system; with 30% already energized. The phased expansion of solar capacity underscores management’s focus on long-term efficiency and cost optimization.
A new 300 MT/day soybean crushing plant, procured from China at an estimated project cost of PKR 1.5billion is expected to be commissioned by September 2026, enabling simultaneous processing of soybean and canola seeds. The Company intends to maintain its existing leverage profile, further supporting the credit profile, currently at 40.1% as of FY25 (9MFY26: 39.5%, FY24: 33.2%), with total borrowings at PKR 3,200mln predominantly short-term to support working capital lines. FCFO-to-finance-cost expanded to 6.0x (FY24: 2.3x), supported by expansion in FCFO to PKR 1,425million (up from PKR 822million during FY24). Going forward, this prudent financial strategy, coupled with improved cash flow generation and strong coverage indicators, provides comfort on the sustainability of growth while preserving balance sheet strength. Additionally, the ongoing strategic shift towards in-house canola seed crushing, reducing reliance on outsourced processing and thereby generating sustainable cost savings, will further augment the bottom line.
The ratings reflect the management's ability to grow business volumes while progressively improving profitability and debt coverage metrics. The Company's significant reliance on imported raw materials keeps financial performance sensitive to global commodity price volatility and foreign exchange movements. Sustaining brand equity through consistent product quality, maintaining strong institutional client relationships, and the timely commissioning of the new crushing plant will remain key considerations for the rating.

About the Entity
Pakistan Oil Mills (Pvt.) Limited was incorporated in April, 1960 as a private limited Company. The Company is primarily engaged in the process of seed filtering and crushing, refining of vegetable oil/ghee by mechanical and chemical processes and sells vegetable oil/ghee, canola meal, and other byproducts including laundry soap. The Company’s production facility, located in Kotri, Sindh, currently has oilseed crushing capacity of 400 MT/day and refining capacity of 333 MT/day of vegetable oil/ghee. The Company is owned by the sponsoring family; Mr. Masood Pervez (~64%) is Chairman and CEO, and Mr. Muhammad Usman (~33%) is a Director. A flour milling facility has been commissioned under subsidiary Agro Plus Flour Mills Pvt. Ltd with a capacity of 295 MT/day, and a new 300 MT/day soybean crushing plant is expected to be operational by September 2026.