Analyst
Shayan Farooq
shayan.farooq@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Mega Conglomerate (Pvt.) Limited
Rating Type | Entity | |
Current (14-Dec-21 ) |
Previous (14-Dec-20 ) |
|
Action | Maintain | Maintain |
Long Term | AA- | AA- |
Short Term | A1 | A1 |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings reflects the Company's association with Mega & Forbes Group of Companies, an established group with presence in energy, cement, shipping, logistics, real estate development and food sectors. Mega Conglomerate (Pvt.) Limited (Mega) operates under a holding company structure with an aim to acquire and consolidate some of the group's investments in energy, real estate and food sectors. The rating incorporates the Company's sizable holding in The Hub Power Company Limited and stake in Haleeb Foods (through Mega Foods (Pvt.) Ltd.), investment properties (through Imperial Developers and Builders (Pvt.) Ltd.) and bill aggregator services (through Paypro (Pvt.) Ltd.). The Company primarily drives income from dividend stream of underlying investments. The profitability and margins are relieved due to dividend inflow emanating from HUBCO. The Company incurs high financial charges from the debt acquired for financing the investment portfolio. The Company is highly leveraged, however, the debt is fully backed by liquid investments and securities including HUBCO shares. The equity base is strengthened on the back of equity injection and subordinate loan from sponsors/group companies. Going forward, consistent dividend stream, which has been augmented from investments in energy sector, is expected to support the financial profile. Moreover, ratings draw comfort from presence of sufficient liquid investment, in form of TDR's and TFC's, on the the Company's balance sheet and expected support from sponsors, if required.
The ratings are dependent on the performance of existing strategic investments and execution of their envisaged business strategies resulting in regular dividend stream. Strengthening the governance framework would be important for the ratings.
About
the Entity
Mega Conglomerate (Pvt.) Limited was incorporated as a private limited company in 2010 in Pakistan under the repealed Companies Ordinance, 1984. The registered office of the Company is situated in Karachi, Pakistan. The Company is owned by Mr. Habibullah Khan (56%) and Mrs. Nusrat Khan (44%). Mr. Habibullah Khan is the founder and Chairman of Mega & Forbes Group. Mega has strategic investments of PKR 24.9bln (as at Sep-21) in an associated company - The Hub Power Company Limited (HUBCO) and PKR 1.2bln in two wholly owned subsidiaries – Mega Foods (Pvt.) Ltd., and G4 Mega Pakistan (Pvt.) Ltd. (G4). Mega Foods has 56% stake in Haleeb Foods, whereas, G4 owns 100% stake in Imperial Developers and Builders (Pvt.) Ltd. (IDBL). Moreover, IDBL owns 100% stake of Karachi Properties Investment (Pvt.) Ltd. (Hotel Metropole). IDBL is engaged in real estate development and has sizeable investment property in Karachi. During FY20, Mega entered into a joint venture with THK to hold 50% stake in Paypro (Pvt.) Ltd. - an online bill aggregating service provider.