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Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Olympia Oils (Pvt) Limited at ‘A-/A2’. The ratings indicate a good credit quality with adequate protection factors and a stable outlook. The previous rating action was announced in December 2023.
Olympia Oils, part of the Monnoo Group, benefits from vertical integration, providing access to necessary resources like soda ash. However, the competitive edible oil industry poses challenges such as price volatility and import dependency.
The company faced difficulties due to regulatory restrictions on genetically modified soybean imports, affecting production and sales. Although product diversification efforts were made, they only partially offset the volume losses. The lifting of the ban is anticipated to aid in operational and financial recovery.
Financial performance has been impacted by reduced revenue and profit margins. While profitability has declined, support from sponsors has alleviated liquidity constraints. The company’s capital structure remains moderately leveraged, bolstered by equity retention and sponsor funding.
Future ratings will depend on improvements in capacity utilization, profitability, and liquidity following regulatory changes.