The Pakistan Credit Rating Agency Limited
28-Jun-19
Analyst
Muhammad Nadeem Sheikh
nadeem.sheikh@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Mobile Sales and Distribution (Private) Limited
| Rating Type | Entity | |
|
Current (28-Jun-19 ) |
Previous (18-Jan-19 ) |
|
| Action | Maintain | Initial |
| Long Term | BBB+ | BBB+ |
| Short Term | A2 | A2 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings incorporate strong foothold of the company in the cellular distribution market. Optimizing on an extensive network of dealers, the company marks its presence as one of the four leading mobile distribution networks of Pakistan. The company functions exclusively with Samsung for distribution services across the country alongside very small businesses with Motorola and Meizu. This enables the company to relish on exclusivity benefits from Samsung, though this also poses a risk of dependence on sole principal. Management, being cognizant of the situation is embarking on several initiatives to mitigate the risk. Room for growth in legal import channel is expected to increase through introduction of DIRBS system. Price hike due to devaluation of local currency is expected to impact the demand of mobile phones negatively. Operating with a status of Private Limited Entity, the company's governance framework indicates room for improvement in terms of independent oversight and effective management. The understanding among the sponsors, although is tacit, it is enriched by social bond. Financial risk profile is reflected by sound business volumes and sanguine margins. With no long term debt on the books, capital structure and coverages remained largely comfortable. Working capital strategy reflected reliance on short term borrowing, wherein which the company is expecting efficiency.
The ratings are dependent on the company’s ability to uphold its strong market position alongside sustaining profitability margins. Improvement in governance structure and revenue diversification remain imperative.
About
the Entity
Mobiles Sales & Distribution (Private) Limited incorporated in 2012, is a Private Limited Company. The Company is principally involved in distributing mobile phones and allied products of Samsung, Meizu and Motorola. The shareholding of the company is equally divided amongst its four founders - 25% each; Mr. Latif Hakeem, Mr. Shakir Ullah, Mr. Asghar Khan and Mr. Muhammad Umer. The company operates through its official brand name "Greentech".
Mr. Asghar Khan is the CEO of the company. He has an overall experience of ~20 years. He is being assisted by experienced professionals. Mr. Latif - the Chairman is involved in strategic decision making of the company.