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The Pakistan Credit Rating Agency Limited
Press Release

Date
23-Sep-20

Analyst
Kanwal Ejaz
kanwal.ejaz@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA upgrades Entity Rating of Global Marketing Services

Rating Type Entity
Current
(23-Sep-20)
Previous
(13-Nov-19)
Action Upgrade Maintain
Long Term BBB- BB+
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

Global Marketing Service (GMS) derives revenue from sales of medical equipment and other supplies, which serve as a key ingredient in the health diagnostic sector. GMS has two primary segments of operations: Clinical and Medical. The entity has experienced significant growth in the recent financial year. The management has intended to merge clinical and medical division in one unit and planned for corporatization of the entity in future. Management of GMS has also planned to develop internal audit department along with interim audit review function. The firm is led by Mr. Zafar, Owner, as assisted by other partners, some of whom are long standing with the firm. The ratings of GMS reflect its improving business fundamentals. The firm imports all of their inventory, hence exposed to currency fluctuation and pricing risk. GMS is poised to derive benefits from new product-line introduced under medical division. This could help GMS to diversify in different segments and reduces the concentration risk. Overall financial profile is characterized by adequate capital base and formal and non-formal leveraging. The growth took positive benefit from large demand related to COVID-19; apart from this, the size also grew independently. Where existing COVID-19 pandemic has hampered almost all the industrial segments of the country - on the other hand - it has shifted the focus towards the self well-being, healthcare and medical engineering segments, which may result in an increased demand. Reversal of key economy driven challenges; interest rate, inflation will strengthen the financial risk appetite of the Company. Going forward, the COVID-19 related sales are expected to normalize but other segments are anticipated to compensate.
The ratings are dependent on the firms's ability to effectively utilize its existing capacity and management of financial risk particularly the debt coverages, wherein any significant dilution would be negative. Delivery on the envisaged business and corporate plan is crucial.

About the Entity
GMS, registered as a partnership concern in 1999, is serving the health industry. The firm have steadily expanded its line of products and created a presence in various diagnostic markets, attaining a respective stature in healthcare and Research/Life Science Solutions. Firm’s focus areas include biomedical investigation, research, life sciences, blood banking, hematology and other medical devices. The firm enjoys exclusive alliances with world leading principals in the In Vitro Diagnostics, Transfusion Medicine, Disposable and other allied segments. GMS has achieved sustained ranking in the top quartile of industry.
Mr. Zafar Mehmood holds majority ownership (68%) of Clinical division, remaining ownership is held by Mr. Muhammad Ayub (20%) and Mr. Fahad Ahmed Khan (12%). 80% of the medical division is held by these individuals. Corporate head office of the firm is in Islamabad. Corporate, Marketing, Distribution and Storage facilities are located in Rawalpindi.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.