Karachi, March 07, 2016 (PPI-OT): JCR-VIS Credit Rating Company Ltd. has upgraded entity ratings of Ali Gohar and Company (Private) Limited (AG and C) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘A/A-2’ (Single A/A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on 16th April, 2015.
The assigned ratings incorporate low business risk and sound financial risk profile of AG and C. Ratings also reflect company’s status as one of the leading national distributor in the country, improving cash flows and sizeable liquidity carried on balance sheet. Moreover, experienced and professional management team, sound IT infrastructure and favourable working capital cycle which results in limited external funding requirements provide support to the ratings.
Distribution industry in Pakistan is very fragmented and competitive in nature resulting in low margins for industry players. Introduction of stringent regulatory requirements in Punjab particularly for movement of temperature sensitive medicines and food items may pose challenges for smaller distributors and result in consolidation in the industry.
This is expected to benefit distribution companies with strong infrastructure and focus on compliance and quality control. As per management, AG and C is well positioned to benefit from these regulations given that it already had the infrastructure in place prior to introduction of these regulations. Going forward, further strengthening the company’s infrastructure and compliance framework will be AG and C’s key focus.
Revenues of the company have depicted healthy growth during FY15 and 1HFY16. Along with organic growth from existing principals addition of new principals has also contributed to growth in turnover. With addition of new principals, growth in sales of high margin products and organic growth in sales from existing principals, profitability of the company is expected to grow, going forward. Capitalization levels of the company have strengthened over time on account of profit retention.
For more information, contact:
Ms. Sobia Maqbool
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi