Press Release

VIS Reaffirms Entity Ratings of Muller & Phipps Pakistan Private Limited

Karachi, April 18, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Muller & Phipps Pakistan Private Limited (M&P) at ‘A+/A-1’ (Single A plus /A-One). Outlook on the assigned ratings is stable. Previous rating action was announced on January 15, 2021.

Assigned ratings continue to factor in M&P’s leading market position in the distribution industry. Ratings reaffirmation takes into account the established and diversified principal base and business sectors, sizeable infrastructure, sufficient resources and extensive outreach with nation-wide distributional coverage. Ratings also take note of robust growth trend in sales revenue over the years, sound liquidity and capitalization metrics along with sound corporate governance infrastructure which is supported by a well-designed organizational structure and adequate IT platform. Ratings also draw comfort from sound cash flow profile, healthy debt servicing, and improving leverage indicators.

Business risk profile is supported by diversified principal base and business segments, established long-term relationships with top-tier principals and demand stability given major revenues emanating from pharmaceutical and telecom segments. Moreover, these positive factors are impacted by fragmented and competitive nature of distribution industry resulting in low margins for industry players. Also, with growing documentation in the economy large distribution companies like M&P are gaining preference among the corporate sector.

M&P enjoys extensive outreach through its widespread and growing network of locations comprising of central warehouses, depots and service centers and vast coverage of customers in retail, wholesale, institutions etc. Since last review, significant increase in the distribution network has been made while overall storage capacity has increased by ~15% over the last 24 months. The logistics function has a balanced mix of rented and owned vehicles for delivery to retail outlets & wholesale market while total fleet size increased by ~6% in the outgoing year. Over the years, the company has managed to improve its working capital cycle through continuous negotiation of better credit terms with existing customers. The assigned ratings remain linked to the maintenance of business growth and sound financial risk profile.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 203) or the undersigned (Ext: 201) at (021) 35311861-70 or email at info@vis.com.pk .




Javed Callea
Advisor

VIS Entity Rating Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

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