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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Aug-20

Analyst
Shazia Afzal
shazia.afzal@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 Maintains Entity Ratings of Brainchild Communications Pakistan (Pvt.) Limited.

Rating Type Entity
Current
(28-Aug-20)
Previous
(12-Sep-19)
Action Maintain Initial
Long Term BBB BBB
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

The ratings reflect Brainchild’s ability to uphold its relative market position in its respective niche of the advertising arena. With a portfolio of sound multinational clientele, the Bee Squared Group (Brainchild, Blitz and Z2C Pakistan), grasps a prominent position in the related market. Strength is derived from the diverse yet competing customer base of the companies. Sponsor acumen provides comfort to the ratings as is evidenced through well-devised corporate strategies. Additionally, association of an International media brand and support of a team of energetic individuals bodes well for the business prospects. The operating segment of the company is directly influenced by the pattern of advertising expenditure in the economy. Profitability has fallen in the recent past, owing to lower number of fresh mega launches. Inclination towards digital domain is, however pacing up. The concept of Brainchild functioning as a bridge between clients and media entails timely delivery of services and payments; key recipe is prudent cash management. Brainchild has chalked out strategies to avail benefits of its liquidity management schemes. This income stream nurtures the company's bottomline margin, in the absence of which the profitability falls thin. Financial risk profile is displayed by adequate coverages and leveraged capital structure. Borrowings majorly constitute short term lines from commercial banks to fund working capital needs and optimize cash management operations.
The ratings are dependent on the management's ability to sustain the market position amidst fierce competition and changing business environment. Profit generation from core business remains critical. Meanwhile, financial metrics including but not limited to working capital management and debt coverage must be upheld.

About the Entity
Brainchild Communications Pakistan (Pvt.) Limited was incorporated as a Private Limited Company in 2010, as a full-service agency operating in the space of communication & media. It is majority owned by Bee Squared (Pte.) Limited (Singapore), which also has a majority share in Blitz (Pvt.) Limited and Z2C Pakistan (Pvt.) Limited.
Brainchild has a four member board including two independent directors. The chairman of the company, Mr. Raihan Merchant, is considered a pioneer in the field of media and advertising. He is supported by a competent management team, consisting of experienced professionals. The Company has three offices, in the country i.e. Karachi, Lahore and Islamabad.
In the year of its incorporation, the company entered into a franchising agreement (non-ownership) with Publicis Groupe, one of the largest media houses in the world. It is based in France. As a result of the affiliation, the company uses the trademark of the divisions of the Publicis Groupe; Starcom and Mediavest.

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.