PACRA Maintains Entity Ratings of MAL Pakistan Limited

MAL Pakistan Limited ('MAL' or 'the Company') derives significant strength from its association with the Army Welfare Trust ('AWT' or 'the Sponsor'). Initially formed through a shareholding agreement between Mobil International Petroleum Corporation (MIPC) and AWT as Mobil Askari Lubricants Limited, the Trust acquired 100% shareholding in 2007, renaming it MAL Pakistan Limited. The Company maintains long-standing blending, packaging, and licensing alliances with ExxonMobil Asia Pacific Pte Limited, alongside key OEM partnerships including Indus Motor Company Ltd. and ISUZU. MAL manufactures and markets lubricants, greases, chemicals, and specialty petroleum products across automotive, industrial, and marine sectors. The governance structure remains strong, supported by board-level committees, an experienced management team, and a well-defined internal control environment.
Pakistan's lubricant market is valued at ~PKR 230B, with annual consumption exceeding ~370mln liters. Despite economic volatility and intense competition from multinational and local players, MAL maintains an established footprint as a top-tier local participant. During CY25, the Company sustained its growth momentum, with revenue increasing by ~13.3% to PKR 10.8bln (CY24: PKR 9.6bln), driven by improved sales volumes across lubricant and chemical lines. Operational margins strengthened, with gross profit margin rising to ~16.9% (CY24: 15.7%) through optimized product mix and pricing realization. Reduced financing costs further enhanced profitability, elevating the net profit margin to 2.7% (CY24: 2.2%). The financial risk profile remains adequate, with leverage standing at 53.5%, predominantly comprising short-term working capital borrowings. The net working capital cycle elongated to 84 days due to elevated receivables and inventory financing requirements driven by higher international base oil prices. However, liquidity remains sufficient, supported by improved operating cash flows, adequate banking lines, and robust backing from the Sponsor.
Going forward, management is pursuing strategic growth initiatives to reinforce its long-term market position. These include relocating its blending facility to the Korangi Creek Industrial Park Special Economic Zone (KCIP-SEZ) to boost operational efficiency and secure tax benefits, expanding dedicated chemical storage infrastructure, and establishing a specialized mining-focused lubricant subsidiary to capture emerging opportunities in Pakistan’s mining sector.
The assigned ratings remain dependent on sustaining revenue growth and preserving profitability margins amid fluctuations in international base oil prices and broader macroeconomic conditions. Timely execution of planned expansion projects, prudent working capital management, and maintaining adequate cash flow coverage metrics are imperative to preserve the favorable rating profile.

About the Entity
MAL Pakistan Limited is an unlisted public limited company incorporated in 1996 and is a wholly owned subsidiary of the Army Welfare Trust (AWT). The Company is principally engaged in the blending, manufacturing, packaging, and marketing of lubricants, greases, chemicals, and specialty petroleum products in Pakistan. The Company operates a blending facility with an installed capacity of approximately 75,000 MT, and maintains an extensive nationwide distribution network. Lt. Gen. Nauman Mahmood (Rtd.) serves as the Chairman of the Board, while Mr. Khawar Jamal heads the Company as the Chief Executive Officer. They are assisted by an experienced team.