International Business Management

CREDIT RATING REPORT | Apr-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
03-Apr-25 BB+ A3 Stable Maintain -
03-Apr-24 BB+ A3 Stable Maintain -
03-Apr-23 BB+ A3 Stable Maintain -
14-Sep-22 BB+ A3 Stable Initial -
About the Entity

IBM, established in 1993, is the sole proprietorship of Mr. Saleem Bikiya, an experienced business personnel serving more than 4 decades in the relevant field. He is working with the biggest groups in the paper industry including the Sinarmas group Indonesia known as Asia Pulp & Paper (APP). The main principle of sole proprietorship belongs to Indonesia and China.

Rating Rationale

International Business Management ("IBM" or the "Company") is a key player in the paper and paperboard industry, actively serving customers and importers. Owned and operated by Mr. Saleem Bikiya, the head of the Bikiya family—renowned for its longstanding presence in the paper business—IBM operates as an indenting agency, facilitating connections between suppliers and importers while generating revenue through commissions. The family’s other business ventures include Madiha International (Pvt) Limited, specializing in paper, and Bikiya Industries (Pvt) Limited, focused on tissue products. IBM is backed by a team of skilled professionals dedicated to delivering value to its clients and ensuring the success of the sole proprietorship. The Company plays a crucial role in the quality assessment and evaluation of various paper and paperboard products in Pakistan. Its stable client base, including family-owned businesses, strengthens its market position. Given the modest scale of operations, the sponsor remains directly involved in management and governance. IBM maintains a low financial risk profile by relying on customer advances, reducing exposure to financial uncertainty. As an intermediary, the Company does not hold large inventories or assume significant credit risk. Its business model, centered on securing payments before fulfilling orders, ensures steady cash flow and minimizes the need for external financing.
In the fiscal year 2024 (FY24), IBM delivered strong financial performance, achieving an operating profit margin of 68.2% and a net profit margin of 67.1%. These impressive figures highlight the Company’s ability to generate substantial profits through its indenting services while maintaining low operational costs. Even after accounting for taxes and interest, IBM retains a significant portion of its earnings as profit.

Key Rating Drivers

The ratings are dependent on IBM's ability to sustain its position amidst a changing business environment and management’s ability to run the operations optimally. With the upcoming growth in the firm’s business; prudent financial discipline and implementation of a stringent control environment shall remain imperative.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

International Business Management

rating analysis

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Profile
Legal Structure

International Business Management ("IBM") was established as a sole proprietorship in 1993 and is the first ISO 9001- 2015 certified paper indenting house in Pakistan.


Background

IBM is serving the customers/importers of paper & paper board with dynamism. IBM has achieved Gold partner award from sinarmas group and the 2017 APP GOLD PARTNERS best overall performance award. IBM has also won the brand ICON award in 2010 and its products achieved Brand of the year award in 2010 & 2012.


Operations

Through indenting operations, IBM serves a huge customer base of paper & paper board. IBM is supporting the quality Assessment / Evaluation of various kinds of paper and paper board, packaging material in Pakistan. IBM also initiates and promotes association government institutions.


Ownership
Ownership Structure

The sole proprietor - Mr. Saleem owns 100% of IBM.


Stability

Mr. Saleem Bikiya is also involved in other business ventures, including Madiha International Private Limited, which focuses on paper imports, and Bikiya Industries, which specializes in tissue paper imports.  


Business Acumen

Mr. Saleem is experienced business person with an experience of more than 4 decades in the relevant field. He is working with the biggest groups in the paper industry including sinarmas group China, Indonesia known as Asia Pulp & Paper (APP).


Financial Strength

The financial strength of the sponsor is represented by the combined wealth of the group companies which are generating sustainable revenue base and profitability.


Governance
Board Structure

As IBM is a sole proprietorship, there is no board and the only owner is the operational head.


Members’ Profile

Mr. Saleem is honored with businessmen of the year award from Prime Minister of Pakistan in three consecutive years i.e. 2007, 2008 and 2009. He is also a director and majority owner of Bikiya Industries Private Limited.


Board Effectiveness

As a sole proprietorship, IBM is entirely controlled by its owner, with no board committees or independent oversight at the Board level.


Financial Transparency

For the first time, IBM has appointed M/s Salman & Co., Chartered Accountants, as the external auditor. They have provided an unqualified opinion on the financial statements of International Business Management for the period ended on June 24. This marks a significant step in ensuring greater transparency and accountability in the financial reporting of IBM.


Management
Organizational Structure

IBM operates with a straightforward organizational structure, consisting of the proprietor at the helm, a dedicated marketing head overseeing promotional activities, and an administrative office responsible for handling day-to-day operations. This lean structure enables efficient decision-making and streamlined management across the organization.


Management Team

Mr. Saleem Bikiya the sole proprietor is solely managing the business with the assistance of some experienced resources.


Effectiveness

The simple structure and operations of IBM needs no management committees.


MIS

Being a proprietorship concern MIS is not required. A simple financial information pack in excel is shared with the management each month.


Control Environment

The information pack provides insight into the operations of IBM and its performance.


Business Risk
Industry Dynamics

Pakistan’s packaging industry consists of four major segments, paper, plastic, tinplate and glass. Paper and plastic segments occupy the major share in total market. Despite, the economic slowdown caused by several issues, demand for the segment remained almost consistent as it falls in the supply chain of various essential products and industries. The segment’s direct costs consist largely of imported raw materials. Chemical wood pulp is one of the main raw materials in the production of paper packaging. Therefore, volatility in exchange rates and international price trends has an impact on costs.The production levels of Paper over the last five years have experienced a CAGR of ~7.2%. This reflects the stability of the segment as it makes up a significant portion of overall Paper and board production. The production of Paper increased in FY24 to ~366,267MT from ~311,675MT in FY23 with an increase of ~17.6% YoY. (Source: PACRA Sector Study)


Relative Position

IBM holds a leading position in the paper trade market, having introduced numerous international brands to Pakistan. According to management, in FY24, IBM, as an indentor, commanded a significant share of the country's total paper imports, including 90% of Art Card imports, 60% of Bleach Board imports, 57% of Offset Paper imports, and 75% of Boxes (A4 Paper) imports.


Revenues

IBM earns a significant portion of its revenue through foreign indenting commissions. For the fiscal year 2024, the revenue reached 469 mln, a slight increase from 463 mln in fiscal year 2023, reflecting steady growth in its operations and commission-based income.


Margins

As IBM is a indenting business and belongs to the services industry, the total inflows and total outflows during FY24 provided a net profit margin of 67.1% and an operating profit margin 68.2%.


Sustainability

IBM earns commission through the indenting of paper and board for major importers in the market along with all three group Companies. The share of imports of paper and board as compared to the overall market stands high for IBM and provides comfort for sustainability.


Financial Risk
Working capital

IBM is sufficiently liquid, managing its working capital requirements through own sources.


Coverages

All expenses are well covered by commission income. Coverages are adequate.


Capitalization

IBM does not need to take on borrowings or open any credit facilities for its operations, hence capitalization levels are strong.
 
 

Apr-25

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International Business Management

financial summary

(PKR mln)

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Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 471 1,974 1,066
2. Investments 0 0 0
3. Related Party Exposure 0 0 0
4. Current Assets 786 0 0
a. Inventories 0 0 0
b. Trade Receivables 5 0 0
5. Total Assets 1,256 1,974 1,066
6. Current Liabilities 0 0 0
a. Trade Payables 0 0 0
7. Borrowings 0 0 0
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 0 0 0
10. Net Assets 1,256 1,974 1,066
11. Shareholders' Equity 1,256 851 532
B. INCOME STATEMENT
1. Sales 469 463 250
a. Cost of Good Sold 0 0 0
2. Gross Profit 469 463 250
a. Operating Expenses (149) (15) 0
3. Operating Profit 320 448 250
a. Non Operating Income or (Expense) 0 0 0
4. Profit or (Loss) before Interest and Tax 320 448 250
a. Total Finance Cost 0 0 0
b. Taxation (5) (5) (12)
6. Net Income Or (Loss) 314 443 237
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 322 448 250
b. Net Cash from Operating Activities before Working Capital Changes 322 448 250
c. Changes in Working Capital (718) 0 0
1. Net Cash provided by Operating Activities (396) 448 250
2. Net Cash (Used in) or Available From Investing Activities (478) 0 0
3. Net Cash (Used in) or Available From Financing Activities (9) 0 0
4. Net Cash generated or (Used) during the period (883) 448 250
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 1.3% 85.2% -14.0%
b. Gross Profit Margin 100.0% 100.0% 100.0%
c. Net Profit Margin 67.1% 95.8% 95.0%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -84.5% 96.8% 100.0%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 19.5% 67.6% 35.4%
2. Working Capital Management
a. Gross Working Capital (Average Days) 2 0 0
b. Net Working Capital (Average Days) 2 0 0
c. Current Ratio (Current Assets / Current Liabilities) N/A N/A N/A
3. Coverages
a. EBITDA / Finance Cost N/A N/A N/A
b. FCFO / Finance Cost+CMLTB+Excess STB N/A N/A N/A
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.0 0.0 0.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 0.0% 0.0% 0.0%
b. Interest or Markup Payable (Days) N/A N/A N/A
c. Entity Average Borrowing Rate 0.0% 0.0% 0.0%

Apr-25

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International Business Management

rating scale

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Apr-25

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International Business Management

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Apr-25

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