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The Pakistan Credit Rating Agency Limited
Press Release

Date
23-Sep-21

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 Ratings of Global Marketing Services

Rating Type Entity
Current
(23-Sep-21)
Previous
(23-Sep-20)
Action Upgrade Upgrade
Long Term BBB BBB-
Short Term A2 A3
Outlook Stable Stable
Rating Watch - -

The ratings take comfort from Global Marketing Service (GMS) reputable business profile in the segment of clinical and medical lab equipment, which serve as a key ingredient in the health diagnostic field. GMS has two primary segments of operations: Clinical and Medical. Clinical division has significant revenue portion and deals with lab diagnostic and testing equipment kits including PCR Covid-19 kits. Due to on-going pandemic situation demand of PCR testing kits has significantly inclined which benefited the Company. The entity has experienced tremendous growth in revenues during FY21 and similar performance is expected to sustain in future which is positive sign for the ratings. Performance of medical division also showed improvement and bodes well with diversification strategy of the entity. Key strategic pillars of GMS are responsibility and responsiveness towards customers need. Going forward the management has intended to merge clinical and medical division as a one unit and planned for corporatization of the entity. 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 firm imports all of their inventory, hence exposed to currency fluctuation and associated pricing risks, Overall financial risk profile is characterized by upright working capital management, comfortable cashflows and coverages, 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 as pandemic has shifted the focus towards the self well-being, healthcare and medical engineering segments. Reversal of key economy driven challenges; rupee depreciation, inflation will further strengthen the financial risk appetite of the Company.
The ratings are dependent on the firm’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.