Press Release

VIS Reaffirms Entity Ratings of Premier Sales (Private) Limited

Karachi, Sep 11, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of ‘A/A-1’ (Single A/A-One) for Premier Sales (Private) Limited (‘PSPL or ‘the Company’). Medium to Long Term Rating of ‘A’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ signifies strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on August 10, 2023.

Ratings incorporate PSPL’s market position, being the second largest distribution company in Pakistan. The Company caters to a diversified category of local and international companies engaged in Pharmaceutical, FMCG and Allied sectors, with pharmaceuticals being the most dominant segment. Ratings also take into account medium to low business risk of the business segments they operate in.

Recent business updates include acquisition of new principals and customers coupled with expansion of existing relationships. Growth in topline was driven by growing customer base and demand stability during the period under review. Despite improvement in overall profitability, bottom-line was impacted by higher operating costs in addition to escalating financial charges. Ratings take into account financial risk emanating from the business model of the Company, which requires maintaining larger inventories to support business growth, thus increasing working capital need. The Company has financed the construction of new warehousing facilities through additional borrowing, resulting in significant increase in gearing and debt leverage. Consequently, debt coverages have weakened during the review period. Nevertheless, the sponsors have been providing working capital support to the Company, which is expected to continue going forward.

Increasing profitability hinges on pricing revisions to existing business lines and introducing new business streams with better margins, which may be challenging for the Company in the prevailing macroeconomic conditions. Going forward, improvement in capitalization indicators together with maintenance of sponsor support will remain important for the ratings.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.



Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.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 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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .