The Pakistan Credit Rating Agency Limited
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Shayan Farooq

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PACRA Assigns Initial Entity Ratings to Inbox Business Technologies Limited

Rating Type Entity
Action Initial
Long Term BBB+
Short Term A2
Outlook Stable
Rating Watch -

Pakistan’s tech industry contributes ~1% to national GDP through local and export sales. Export of IT services are estimated to contribute ~ $ 1.7bln to the GDP. The largest contributor remains IT consultancy (~33%), followed by software exports (~25%). The industry comprises ~ 7000 companies providing customized software development services and Business Process Outsourcing (BPO) services. Lately, the Government and regulatory bodies have taken initiatives such as the establishment of IT Parks and incubators to promote the industry and provide an enabling ecosystem for businesses and start-ups.
The ratings reflect Inbox Business Technologies Ltd.'s ('Inbox' or 'the Company') association with a strong business Group; Dawood Hercules Group. The product slate comprises of Enterprise Management Service (EMS), Digital Security and Intelligence (DSI), and Citizen Services and Customer Experience (CSX) in both, public and private sectors. EMS consists of providing customer support, IT outsourcing, warranty, remote assistance, and maintenance services. DSI includes Web Management Services (WMS), which is technical facility deployed on internet gateways in Pakistan, to detect and block illegal international voice calls and manage internet traffic. Whereas, CSX involves the provision of IT related services to the public sector. Inbox has a competitive edge in the industry, as it provides IT solution and services. In the previous years, consistent accumulated losses due to prolonged receivables cycle and inefficient working capital management impacted the financial risk profile. However, lately, the Company's topline and in turn margins experienced growth on the back of renewal of public sector contracts. This also benefitted the Company's bottom line. The Company's financial risk profile is characterized by stretched coverages and an elongated working capital cycle. Leveraged capital cycle is lately supplemented by sponsor's loan.
The ratings are dependent on the Company's ability to sustain its margins and post healthy coverages while maintaining requisite cushion and working capital discipline. Continued sponsor support remains imperative for ratings. Any further deterioration in cashflows and/or coverages will have a negative impact on ratings.

About the Entity
Inbox Business Technologies Limited (the Company) is a public unlisted company. Primary business activity of the Company involves provision of technology services to public and private sector. The Company was incorporated in 2001, by Mr. Ghias Khan (CEO of Engro Corporation Limited) along with his friends, Mr. Mir Nasir and Mr. M. Ali. However, later, it was acquired by Dawood family.
Inbox's majority shareholding resides with Patek Pvt. Limited (99.9%), a holding investment company held by the Dawood Family. The Company's Board is chaired by Mr. Arif Janjua. While, Mr. Mohsin Ali heads the Company as its Chief Executive Officer. He is supported by a team of experienced professionals.

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.