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

The ratings reflect Pakistan Oil Mills (Pvt.) Limited's (or 'the Company') established presence across the edible oil sector, encompassing growing brand equity for its edible oil brands (Naz, Pak, Sun, and Pure). This is further augmented by its affiliation with a prominent industrial conglomerate active in both the edible oil and textile industries. The sponsors’ strategic vision is evident in the development of a performance-driven corporate culture, enabling the Company to navigate the inherent challenges of the edible oil sector effectively. As the country is highly reliant on imported edible oil, which mainly constitutes palm oil—a key ingredient in the company's production. The Company's operations are secured by a robust corporate governance framework, stringent internal controls, and an experienced management team. During FY25, the Company’s topline grew by approximately 25%, primarily driven by higher volumetric sales, reported at PKR 25,809mln (FY24: PKR 20,569mln). Revenue performance remained robust relative to peers, supported by sustained demand growth in the edible oil segment and a focused customer portfolio that ensured consistent quality standards and timely cash collections. However, the Company has demonstrated a decline in its margins this year, as the pressure on selling prices resulted in a proportionally greater decline in revenue compared to the decrease in the cost of goods sold (COGS). Resultantly, net profit margin remained stagnant at 2.6% (FY24: 2.6%)amounting to PKR 678mln, compared to PKR 538mln last year. Furthermore, the Company benefits from the strategic leadership of its sponsors, whose extensive international experience and successful business track record contribute to operational resilience and growth. As the Company is transitioning towards a more diversified operational and revenue structure. In pursuit of this diversification, the Company has commissioned and made operational a flour milling facility, operating at a capacity of 295 metric tons per day (MT/day) under the subsidiary named Agro Plus Flour Mills Pvt Ltd. Additionally, the Company has executed an agreement for the installation of a soybean crushing solvent plant, projecting a capacity of 300 MT/day, with an estimated project cost of approximately PKR 2 billion. Financially, the Company's leveraging is depicting an increasing trend, driven by a higher reliance on short-term borrowings to meet working capital requirements, which is consequently pressuring key debt coverage ratios.
The rating depends on the management's ability to maintain growing business volumes while sustaining margins and profitability. Given the Company's significant reliance on imported raw materials, its financial performance remains highly sensitive to volatility in foreign exchange rates and potential disruptions within international trade channels, which directly impact the import cost of the materials. Therefore, prudent management of working capital and maintaining strong coverages remains critical. Sustaining brand reputation through customer satisfaction and disciplined debt management are also vital for the given 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 per day and refining capacity of 333 MT of vegetable oil/ghee per day. The Company’s major ownership resides with Mr. Masood Pervez (~ 64%) and Mr. Muhammad Usman (~ 33%). Mr. Masood chairs the Company's Board and is also the CEO.