Press Release

VIS Assigns Initial Entity Ratings of ‘BB/A-3’ to Commtel
 

Karachi, April 13, 2020: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of Commtel at ‘BB/A-3’ (Double BB/Single A-Three). The long term rating signifies obligations deemed likely to be met. Protection factors capable of weakening if changes occur in the economy. Overall quality may move up or down frequently within this category. Short term rating of ‘A-3’ depicts satisfactory liquidity and other protection factors qualify entities/ issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned rating is ‘Stable’.

The assigned ratings take into account extensive experience of sponsors in the Information Technology business. Business risk profile of the company is supported by sizeable quantum of medium to long tenor contracts in hand and healthy contract renewal rate with government & private organizations. Assessment of financial risk profile incorporates extended working capital cycle due to sizeable trade debts and low quantum of cash flow from operations which restricts mobilization of long-term borrowings. Ratings are also constrained by high competitive intensity, client concentration in revenues and room for improvement in corporate governance framework.

Commtel is a family-owned partnership concern business which principally is engaged in IT solutions. The company has a presence in four countries USA, EU, UAE and Pakistan. Head office of the company is based in Karachi, whereas representation offices are present in three different cities namely: Lahore, Islamabad, and Peshawar with a total staff of 140 personnel. The company caters to the customized needs of private and government sectors via partnerships with renowned multi-national companies such as Cisco Systems, Intel Security Solution Provider, Lenovo Business Partners, IBM and many more. Commtel has security clearance from General Head Quarters (G.H.Q), Military Agency, Civil Agency, Joint Staff Head Quarters (J.S.H.Q) and Pakistan Air Force (PAF).

With the advent of coronavirus pandemic and continued lockdown, overall demand compression and economic slowdown is expected to affect various industries; the full impact of which is yet uncertain. Hence, the ratings are dependent upon maintenance of financial parameters at adequate level during these developments and any adverse change in the same will trigger a rating review.

For further information on this rating announcement, please contact Mr. Madeeh Ahmed (Ext: 204) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk .




Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (April 2019)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Corporate-Methodology-201904.pdf

________________________________________________________________________________________________________________________________
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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited