Press Release

VIS Assigns Initial Entity Ratings to Tech Sirat (Pvt.) Limited

Lahore, February 22, 2024: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Tech Sirat (Pvt.) Limited (TSPL or ‘the Company’). The medium-to-long-term rating of ‘BBB+’ signifies adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are sound. Outlook on the assigned ratings is ‘Stable’.

TSPL was incorporated in 2014, in Pakistan under the Companies Ordinance 1984 (now Companies Act, 2017). The Company is a subsidiary of M/s. Muller and Phipps Pakistan (Private) Limited (M&P) which holds 99.99% shareholding. M&P has a long-established operating history of more than a century in logistic & distribution business. The Company is mainly engaged in the import and supply of smart phones and computers. TSPL has a wholly owned subsidiary, namely Tech Sirat Technologies (Private) Limited. The Board of directors of TSPL is entirely composed of members from its parent Company’s Board /Management.

The local smartphone market endured challenges during the CY23. In early 2023, severe import restrictions caused a major delay, resulting in the closure of numerous assembly plants, therefore mobile phone manufacturing also remained subdued till 1H’CY23. Subsequent to improvement in forex reserves in June 2023 and SBP’s relaxation on opening of LCs, local mobile manufacturing has improved. Resultantly, topline started recovering for the industry players, with major growth witnessed from August 2023 onwards. The industry's recovery and growth potential is evident, however, the same remains sensitive to changes in government policies. Assigned ratings take into account industry's overall risk profile with strong potential for innovation and economic contribution partly offset by inherent risks and competitive challenges. The ratings incorporate the positive demand dynamics for mid-tier mobile with a growing smart phone subscriber base.

Assessment of financial profile reflects considerable growth in topline vis-à-vis SPLY, largely due to Xiaomi (the Principal) mobile phone sales, despite obstruction in local manufacturing of phones due to supply constraints. Gross margins remained intact on account of better contribution margins on smart phones, leading to a positive effect on the bottom line, despite higher finance cost. In addition, the debt service coverage has remained adequate on a timeline basis. Leverage indicators increased on account of significant reliance on working capital financing. To support the advance payment arrangement with Xiaomi, liquidity support has been extended by parent company in the form of advances which provides comfort. Continuation of cash flow support from the parent will remain important from ratings perspective. In the medium to long-term, the management does not intend to mobilize any long-term loans. Maintaining low gearing levels will remain important for ratings. Going forward, improvement in equity base through augmentation of revenue and improvement in margins will remain key rating sensitivities. Meanwhile, ratings are constrained on account of industry dynamics with higher FX risk and price competitiveness in the mobile phone market, together with risk of import restrictions and supply chain issues.

For further information on this rating announcement, please contact the undersigned at 042-35723411-12 (Ext. 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates

VIS Issue/Issuer Rating Scale

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