Karachi, August 09, 2021 (PPI-OT):VIS Credit Rating Company Ltd. has reaffirmed entity ratings of Ali Gohar and Company (Private) Limited (AG and C) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned rating is ‘Stable’. The long term rating of ‘A’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. The previous rating action was announced on July 08, 2020.

AG and C is principally engaged in distribution of goods and services. The Company operates in three segments including pharmaceutical, medical devices and consumer goods. The assigned ratings take into account AG and C’s position as one of the leading national level distribution companies in the country. Ratings take into account AG and C’s low business risk profile and sound distribution infrastructure and controls. Overall corporate governance framework is supported by stable and professional management team and sound IT infrastructure. Ratings also reflect the Company’s sound financial profile as reflected by low leveraged capital structure, conservative financial policy and adequate liquidity profile. Ratings remain dependent on maintaining projected financial indicators.

Net sales increased by 13% during FY20 with growth largely being a function of higher pharmaceutical demand from existing principals amidst COVID-19. However, overall profitability was impacted by change in segment mix, higher provisioning against Expected Credit Losses and doubtful receivables due to implementation of IFRS-9 and greater finance charges due to implementation of IFRS-16 during FY20. Going forward, management envisages profitability levels to depict improvement given planned organic growth from existing and new principals along with planned business diversification.

Liquidity profile of the company is considered adequate with satisfactory cash flow coverage of outstanding obligations. Capitalization indicators are reflective of conservative financial policy, leverage indicators witnessed an increase in FY20 on account of concessionary debt drawn for payment of wages and salaries amidst COVID-19 and to finance working capital needs. Going forward, management projects leverage indicators to report at pre-COVID levels in view of higher projected growth in equity base underpinned by profit retention.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/