The Pakistan Credit Rating Agency Limited
26-Jun-20
Analyst
Faraan Taimoor
faraan.taimoor@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
- Criteria | Rating Modifier | Jun-19
Related Research
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PACRA ASSIGNS DEVELOPING OUTLOOK TO SONYA TRAVELS LTD | RATING WATCH
| Rating Type | Entity | |
|
Current (26-Jun-20 ) |
Previous (17-Sep-19 ) |
|
| Action | Maintain | Initial |
| Long Term | BBB | BBB |
| Short Term | A2 | A2 |
| Outlook | Developing | Stable |
| Rating Watch | Yes | - |
The ratings take into account emergent challenges arising from subdued outlook of air travel industry in the wake of the coronavirus outbreak. There has been a significant dip in air passenger air traffic. The revival is also taking place gradually. Lately, the Kingdom of Saudi Arabia has restricted the Hajj to residents of the country. The unknown depth and duration of the outbreak's impact will significantly weigh on all players in the air travel industry. Hence the ratings are assigned Watch with outlook developing. Sonya Travel derives revenues primarily from two business segments, wherein which it procures tickets in bulk and then undertake sales, and secondly through the sale of tickets on a day to day basis. The company earns profitability based on the airlines' commission and incentives and also heightened margins on bulk procurement. These revenue streams have been severely affected, as health concerns from the host countries along with economic recession will reduce the demand going forward. The financial structure is adequate however times are hard which may stress the financial profile. The leverage is high in comparison to the equity base and funded and non-funded leverage indicators. The downward adjustment in the interest rates would add cushion.
The ratings are dependent on Sonya’s ability to sustain its business and financial profile. The prolonged duration in the subdued volumes can add strain to the financial risk profile. Profitability margins also need to revived, post business resumption. Financial discipline including coverages and governance is considered essential.
About
the Entity
Sonya Travels is a private limited company. The company is equally owned by Mr. Tariq Rahim and Mr. Ali Rahim. Sonya Travels has a history of more than two decades, having business in the fields of Air Travel and Tourism. In the year 2018, the company enjoyed the privilege of entertaining more than half a million tourists to and from various parts of the world. Sonya Travels is one of the largest Air travels, Tours and Umrah company having more than 12 branches nationwide. The company also has footings in UAE and KSA.
The company has a six member board of directors. The CEO of the company is Ms Sarosh Rahim while the business affairs are looked after by Mr. Zamir Ahmad. Both of them are professionals with experience of more than two decades