The Pakistan Credit Rating Agency Limited
27-Dec-19
Analyst
Muhammad Mubashir Nazir
mubashir.nazir@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-19
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-19
Related Research
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PACRA Maintains Entity Ratings of Mobile Sales and Distribution (Private) Limited
| Rating Type | Entity | |
|
Current (27-Dec-19 ) |
Previous (28-Jun-19 ) |
|
| Action | Maintain | Maintain |
| 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 distributors of Pakistan. The company functions exclusively with Samsung for distribution services across the country, enabling it to relish on exclusivity benefits, though this also poses a risk of dependence on the sole principal. Sponsors, being cognizant of the situation, are embarking on several initiatives to mitigate the risk, through diversification to other businesses. Pakistan mobile import market witnessed a decline in FY19 owing to implementation of DIRBS and price hike factors. The same trend reflected in the topline of the company, which is expected to recover, going forward. The company's governance framework has undergone several changes during the period under review, including induction of two independent directors on the Board. The understanding among the sponsors, although being tacit, is enriched by social bond. Financial risk profile is reflected by adequate margins and healthy debt servicing capacity. With no long term debt and a sizable equity on books, capital structure reflects a comfortable outlook. Working capital strategies reflect dependence on short term borrowings, wherein the company is expecting efficiency.
The ratings are dependent on the company’s ability to uphold its market position alongside improving performance indicators. Meanwhile, business diversification remains 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. 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.