Inbox Business Technologies Limited (‘Inbox’ or ‘the Company’) is a public unlisted Company, incorporated in 2001. It was initially registered as a partnership concern, but its status was later changed to public unlisted effective from March 2017.

In 2001, Inbox started as a local assembler of computers in Pakistan by Mr. Ghias Khan along with his friends, Mr. M Nasir and Mr. Mohd. Ali. In 2005, 51% stake was acquired through companies with common directorship and ownership of Hussain Dawood & family. Since then, Inbox is associated with the Dawood Group, one of the largest conglomerates in Pakistan. The Company transitioned from assemblers to system integrators in 2007. In 2009, the Company started providing managed services and then introduced digital services in 2014, offering customized processes, managed services infrastructure, and technology alliances. At the end of 2019, 100% of the stake was acquired by Mr. Hussain Dawood & family.

The primary business activity of the Company is to deliver essential IT services, including IT service management, IT operations management, remote management, and digital content management. Additionally, the Company offers comprehensive digital solutions ranging from cybersecurity to asset management. The Company operates two Security Operating Centers located in Islamabad and Karachi. Inbox collaborates with federal, provincial, and city governments to establish smart governance initiatives, encompassing Internet of Things (IoT), urban security, and intelligent transportation systems. Inbox has established a subsidiary in the Kingdom of Saudi Arabia (KSA) named Inbox Technologies Arabia. This subsidiary will extend these services, including Governance, Risk, and Compliance (GRC), to clients in KSA.

Approximately 99.9% of the company’s shares are held by Dawood Investments Pvt. Limited (formerly known as Patek Pvt. Limited), a holding company with investments in the technology sector. Dawood Investments Pvt. Limited is owned by Dawood Family, who are currently leading one of Pakistan’s largest conglomerates, with a diversified business portfolio encompassing key sectors including: fertilizer, petrochemicals, energy, telecommunication infrastructure and food & agriculture

The company’s ownership is notably stable, supported by the sturdy and diversified presence of its sponsoring group, Dawood Investments (Private) Limited. This strong backing spans multiple economic sectors, including food, fertilizers, petrochemicals, energy, information technology, terminal services, and telecommunication infrastructure. Such a well-established foundation ensures the company’s continued growth and stability.

The Dawood Group is a well-established conglomerate with over three generations of expertise in both commercial and social enterprises. The Group has diversified interests across various economic sectors, leveraging its strong affiliations and technical prowess through international joint ventures. This strategic approach has significantly contributed to the success and growth of the companies within the Group.

The company’s financial strength is deeply rooted in the solid foundation provided by its sponsoring group, Dawood Investments Pvt. Limited. With significant interests in technology-based businesses, this backing ensures a stable and robust platform for the company’s ongoing growth and financial stability.

The Board of Directors consists of five members, including the Chairman, with all members being Non-Executive Directors except for Mr. Farhan Shah, the CEO of Inbox Business Technologies Limited.

Mr. Mohammad Shamoon Chaudry, Chairman of the Board and CEO of Dawood Hercules, brings 28 years of experience and has been a board member since March 25, 2021. He holds an MSc in Finance from London Business School and an MBA in Finance from LUMS, and is a member of the Human Resource & Remuneration Committee (HR&RC). Mr. Mohsin, with a Bachelor’s in Business Administration and over 20 years of experience, joined the board on October 20, 2023. Mr. Sikandar Hazir, Head of HR at Dawood Group, has 17 years of experience, joined the board on April 27, 2022, holds a BE in ICT and an MBA from NUST, Islamabad, and serves as the Chairman of the HR&RC. Mr. Shafiq Ahmed, CEO of Dawood Investments (Pvt) Ltd, with 28 years of experience, has been on the board since July 7, 2020, is a Chartered Accountant from ICAP, holds a law degree from Karachi University, and chairs the Board Audit Committee (BAC). Ms. Nazia Hasan, CFO of Dawood Lawrencepur Limited & TGL, with 16 years of experience, joined the board on January 26, 2024, holds an MBA in Finance from IBA, and is a member of the BAC. The board’s composition, with its blend of extensive experience and diverse expertise, ensures strong governance and strategic oversight.

During 6MCY25, the Board of Directors held two meetings, both of which saw full attendance from all members. These meetings primarily focused on discussing annual audit affairs. The full participation in these meetings underscores the board’s commitment to effective governance and oversight. The Human Resource & Remuneration Committee (HR&RC) and Board Audit Committee (BAC) at the holding company, further enhance the governance framework for Inbox, ensuring comprehensive oversight and strategic alignment.

For the year ended December 2024, the company’s external auditors, Grant Thornton, have issued an unqualified opinion on the financial statements. This reflects a high level of financial transparency and accuracy in the company’s reporting. Grant Thornton is a QCR-rated firm and is listed in the State Bank of Pakistan’s category ‘A’ panel of auditors, further underscoring the credibility and reliability of the financial audit.

The company’s organizational structure is designed with clear reporting lines, divided into operations, specialized projects, finance, HR, legal, and business development. Each function is overseen by its respective director or department head, who reports directly to the CEO. Notably, the Head of the Internal Audit department has a dual reporting line: functionally to the Board of Directors’ Audit Committee and administratively to the CEO. This structure ensures effective oversight and accountability across all areas of the company.

The company’s management team is composed of highly experienced and qualified professionals. Leading the team is Mr. Farhan Shah, the Chief Executive Officer, who brings over 20 years of experience in the technology industry and has been with Inbox since 2007. Mr. Kamran Hanif, the Chief Financial Officer, joined the company in August 2020 and also serves as the CFO for Dawood Hercules. Their extensive expertise and leadership are pivotal in driving the company’s strategic vision and operational excellence.

The company has established a management committee composed of senior executives. This committee regularly reviews and discusses policies, procedures, and key performance indicators to ensure effective oversight and continuous improvement. Additionally, monthly reports detailing the status of various projects are shared with the Board of Directors, facilitating transparent communication and informed decision-making.

The Company is using Oracle R-12 as its Enterprise Resource Planning (ERP) system. This advanced solution ensures seamless integration and optimization of all business processes, driving operational efficiency and supporting informed decision-making across the organization.

Oversight and effective management are ensured through the internal audit department, which diligently monitors the company’s various functions and internal controls. This department reports directly to the Board’s Audit Committee, providing an additional layer of accountability. The department is led by Mr. Amjad Ali, he is Certified Internal Control Auditor -CICA from The Institute of Internal Controls. He has been with Dawood Group since 2010. He is currently performing role of Head of Internal Audit in Dawood Hercules, Reon Energy and Tenaga Generasi.

The technology sector in Pakistan is evolving rapidly but remains exposed to structural and cyclical challenges that weigh on its performance. Contributing ~1.6% to GDP in FY24, the sector reached a market size of PKR ~1,753 billion, up ~32.8% YoY, with exports growing ~24.1% to USD ~3.2 billion, largely driven by computer services. However, profitability pressures persist, with gross margins improving to ~58.3% in 6MFY25 but operating and net margins declining to ~17.0% and ~12.3%, respectively, due to high wage costs (~63% of COGS), inflationary pressures, and compressed operating efficiency. This local fragility contrasts with the global technology industry, which continues to demonstrate strong resilience, expanding from $8.85 trillion to $9.63 trillion in 2024 at a CAGR of 8.8%. Domestically, vulnerability is reflected in a sharp fall in startup funding to just $8 million in 1QCY24, while PKR-denominated export growth (∼259 billion in 9MFY24) masks stagnation in USD terms, underpinned by currency depreciation rather than real volume expansion. Traditional operating margins of ~30% have compressed further due to high inflation, restrictive policy rates, and reduced tax incentives, amplifying the sector’s dependence on policy stability, cost control, and favorable regulatory shifts. Going forward, while rising digital adoption and government-backed initiatives like IT parks and Special Technology Zones offer long-term growth potential, short-term sustainability will hinge on liquidity management, operational efficiency, and the ability to withstand external and domestic economic headwinds.

Based on the total revenue generated by the tech industry, Inbox commands a market share of slightly over 1%. This positioning reflects the company’s presence and competitive stance within the broader technology sector. While this market share indicates a modest footprint, it also highlights potential growth opportunities. By leveraging its diverse revenue streams and strategic initiatives, Inbox is well-positioned to enhance its market share and strengthen its relative position in the industry.

The company has strategically diversified its revenue streams across five key segments, each contributing to its financial stability. Enterprise Management Services (EMS), which includes customer support, warranty, maintenance services, and remote assistance, contributed approximately 10% to the total revenue, amounting to PKR 454 million in CY24 (6MCY25: PKR 288mln). Key clients in this segment include PTCL, Coca Cola Pakistan, Standard Chartered Bank, DELL, and IBA. Digital Security and Intelligence (DSI), encompassing Web Management Services for cybersecurity, did not generate revenue this period due to the completion of existing contracts. Major clients here include PTA and Law Enforcement Agencies (LEAs). The Citizen Services & Customer Experience (CSX) segment emerged as the major revenue driver, accounting for around 84% of the total revenue with PKR 3,891 million during CY24 (6MCY25: PKR 2,078mln). This segment serves clients such as the Punjab Mass Transit Authority, Metro Bus Punjab, and the Excise, Taxation and Narcotics Control Departments of Sindh and Punjab. Cloud & Converged Systems Integration (CSI), offering scalable enterprise solutions and robust cybersecurity measures, contributed 3.20% with PKR 147 million. The International Business segment, primarily from operations in KSA, added 7.7% to the total revenue, amounting to PKR 217 million. Notably, the establishment of Inbox Arabia in KSA marks a strategic expansion in the international market. The company’s heavy reliance on the CSX segment, which contributes over 84% of total revenue, poses a concentration risk. Any adverse changes in government policies or budget allocations could significantly impact this segment. The stability in EMS revenue is a positive indicator, supported by a diverse client base including major corporations like PTCL and Coca Cola Pakistan. However, the lack of revenue from the DSI segment this period highlights potential volatility and dependency on contract renewals. The CSI segment, while contributing a smaller portion of revenue, offers growth potential through its focus on scalable solutions and cybersecurity, which are increasingly critical in today’s digital landscape. The international business, particularly in KSA, shows promise with strategic expansion through Inbox Arabia, but also introduces geopolitical and operational risks associated with international markets. Overall, while the company demonstrates strong revenue generation and client diversification, the concentration in the CSX segment and dependency on government contracts warrant close monitoring. Ensuring stable contract renewals in DSI and international segments will be crucial for mitigating business risks.

The company experienced a significant contraction in its financial margins during the current year (CY24) compared to the previous year (CY23), a decline primarily attributable to rising raw material costs. Specifically, the Gross Profit Margin fell sharply from 17.3% in CY23 to 12.9% in CY24, representing a 4.4 percentage point drop that highlights the direct pressure on input costs. This negative trend was mirrored in the Operating Margin, which declined from 7.2% to 4.0% over the same period, indicating that cost-side headwinds are severely impacting the company's core profitability, consequently leading the Net Profit Margin to follow a similar downward trajectory. However, during 6MCY25, the GP margin of the company showed an improvement and stood at 24.1%. this positive trend is further passed onto operating margin and net profit margin which were reported at 15.9% and 11.1% respectively.

The company is strategically prioritizing its export market, having successfully booked and delivered two contracts, with additional projects currently in the pipeline. Recognizing the rising demand for skilled resources, the company has also ventured into resource recruiting to bolster its talent pool. Importantly, the company has no plans to increase its debt exposure in the long term, reflecting a prudent approach to financial management and a commitment to maintaining a strong balance sheet. This strategic focus on exports and resource optimization, coupled with a conservative debt strategy, positions the company well for sustainable growth and financial stability.

The company has demonstrated a significant and accelerating improvement in operational efficiency, primarily by reducing its Working Capital Cycle (WCC) from 156 days in CY23 to 116 days in CY24, further optimizing to 100 days in 6MCY25. This gain was achieved through superior management of both inventory and receivables: Inventory Days were sharply cut from 19 to 8 days, and Trade Receivable Days decreased notably from 137 to 108 days, while a slight increase in Payable Days to 38 days provided an additional cash flow benefit, collectively resulting in a major reduction in Net Working Capital (NWC) days from 126 to 78 days. Concurrently, the company successfully reduced its short-term debt exposure, with short-term trade leverage declining from 65% to 41.2% and total short-term leverage falling to 29.9%, all while maintaining a robust liquidity position, as reflected by a Current Ratio of 1.7x, confirming a stronger balance sheet structure coupled with enhanced operational effectiveness. The dramatic 48-day improvement in Net Working Capital (from 126 to 78 days in CY24) is a highly positive indicator of enhanced operational discipline and cash flow management. The sharp reduction in Inventory Days (from 19 to 8) suggests tight supply chain control and reduced obsolescence risk, while the decline in Receivable Days (from 137 to 108) points to effective collections and credit policy enforcement. The ability to fund this lower working capital need with less debt, evidenced by the reduction in both short-term trade and total leverage, significantly strengthens the company's financial risk profile. The maintenance of a strong Current Ratio (1.7x) confirms that the company's increased efficiency has not come at the expense of liquidity, positioning it well to meet short-term liabilities and capitalize on growth opportunities.

The company's coverage metrics for CY24 present a mixed and complex performance profile concerning debt servicing capacity, despite indications of cash flow improvement. While the EBITDA-to-finance cost ratio showed slight improvement, rising to 2.7x in CY24 from 1.9x in CY23, the core operational cash flow strength is less clear. The company reported a significant turnaround in Free Cash Flow from Operations (FCFO) growth, rising from a contraction of −85.5% in CY23 to a reduced contraction of −76.3% in CY24, which, despite being negative, reflects a substantial 9.2 percentage point improvement in cash flow generation dynamics. However, the FCFO coverage of finance costs deteriorated notably, decreasing from 2.2x to 1.2x (though 6MCY25 data shows a strong recovery to 3.4x). This downward trend is mirrored in the comprehensive cash flow coverage ratio (covering finance costs, current debt maturities, and excess short-term debt), which fell sharply from 1.9x to 0.9x. Furthermore, the debt payback period worsened dramatically from 0.2x to 119x in CY24 (with an 6MCY25 figure of 3.2x), indicating a significantly extended period required to repay borrowings and heightened credit risk. On a positive note, the liquid coverage improved substantially from 0.3x to 2.4x, confirming a strong enhancement in the ability to comfortably meet short-term obligations. The divergence in coverage metrics necessitates a granular assessment of cash flow quality. The decline in the FCFO coverage and the overall cash flow coverage ratio below 1.0x in CY24 (0.9x) is a critical risk factor, signaling that the year's total operating cash flow was insufficient to cover core debt service requirements (interest, current maturities, and excess short-term debt). The alarming 119x debt payback period further underscores this shortfall. While the reported reduction in the FCFO contraction suggests improved operational efficiency, this improvement was clearly insufficient to offset the overall debt burden in CY24. The strong recovery projected by the 6MCY25 figures (FCFO coverage at 3.4x and debt payback at 3.2x) provides a forward-looking mitigation, suggesting the 2024 pressure may have been temporary. Nevertheless, the simultaneous improvement in liquid coverage to 2.4x indicates that the company maintains strong short-term liquidity buffers to manage this temporary cash flow strain, preventing an immediate solvency crisis despite the deterioration in key coverage ratios.

The company maintains a highly leveraged capital structure, with a leverage ratio of 53% as of 9MCY24, up from 41% in 9MCY23. This increase is primarily due to a rise in total borrowings, which now stand at PKR 327 million, up from PKR 106 million in the corresponding period. Despite this increase, the company’s capital structure remains relatively balanced, with a healthy equity base of PKR 1,062 million (9MCY23: PKR 1,027 million), underscoring management’s commitment to sustaining shareholder equity levels. Short-term borrowings now represent a higher share of total borrowings at 19.1% in 9MCY24, compared to 7.9% in 9MCY23, reflecting a greater reliance on short-term financing. Utilized short-term borrowings, which are largely comprised of running finance and Murabaha arrangements, stand at 44.3% of the available limit, indicating substantial utilization of short-term credit lines. Additionally, interest payable days have increased to 6.7 days, suggesting the need for vigilant cash flow management to ensure timely payments. The company’s borrowing cost remains competitive, with a stable spread of 0.3% over KIBOR, minimizing finance expense volatility. Management’s strategy appears focused on sustaining an optimal leverage level while effectively managing finance costs and ensuring minimal exposure to unforeseen liabilities. Overall, while leverage has increased, the company’s adequate equity base and disciplined borrowing approach support a manageable financial risk profile. However, careful monitoring of short-term financing reliance and interest obligations is advisable to maintain financial stability.