Press Release

JCR-VIS reaffirms Entity Ratings of Ali Gohar & Company (Private) Limited

Karachi, September 28, 2018: JCR-VIS Credit Rating Company Ltd. has reaffirmed entity ratings of Ali Gohar & Company (Private) Limited (AG&C) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on November 7, 2017.

Ratings assigned to AG&C derive strength from the company being one of the leading distribution companies in the country with sizeable market share in all three segments that the company operates; pharmaceutical, surgical instruments, implants and consumer goods. Current ratings also take into account sound distribution infrastructure and consistent growth in company’s client base with AG&C undertaking distribution for over a dozen principals. Ratings also incorporate company’s conservative financial profile and low business risk model whereby as per contractual arrangement for major portion of the Company’s sales foreign currency, sales return and expiry risk is borne by the principals.

Profitability profile witnessed improvement in FY18 on the back of double digit growth in revenues. Increase in sales was a function of organic growth from existing clients, addition of new geographic regions for existing clients and increase in product portfolio of current principals. Going forward, revenues for FY19 will be a function of increase in sales of existing principals and full year impact of addition of new geographic region and broadening of product range of existing principals.

Liquidity profile of the company is considered sound in view of healthy cash flows. Moreover, capitalization levels of the company have strengthened overtime on account of retained profits. While trade debts have increased on a timeline basis, ageing profile of trade debts is considered satisfactory; however utilization of short-term borrowings witnessed an increase during FY18 due to higher stock levels carried on the balance sheet. Despite increase in borrowings, leverage indicators continue to be maintained at prudent levels. Going forward, future level of leverage indicators will continue to be tracked by JCR-VIS.

Overall corporate governance framework is supported by stable and professional management team and sound IT infrastructure which was further improved during the outgoing year. Enhancing distribution infrastructure continues to be a strong focus of the management and a source of competitive advantage for AG&C. In this regard, quality assurance department has been further strengthened during the outgoing year while a separate resource has been hired for cold chain management.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 (10 lines) or fax to 35311873.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited