Sohail Ahmed Qureshi
PACRA Upgrades Entity Rating of Interwood Mobel (Private) Limited
Interwood Mobel (Private) Limited (‘Interwood Mobel’ or ‘the Company’) is engaged in the manufacturing & sale of complete range of home, offices, kitchens, doors, wardrobes, flooring, accessories and bespoke furniture. The ratings reflect Company’s strong brand equity and long-established presence in the furniture & fixture industry of Pakistan. High competition subsists in the domestic market on back of unstructured & unregulated players. Key opportunities are generically available to the furniture manufacturers & dealers in terms of growing urbanization, supportive regulatory structure, rapid changes in furniture trends, disposable income of consumers, and robust online buying. Demand in the furniture market is intact, however raw material has been depleted over the years due to deforestation. Interwood Mobel procures safe and good quality imported wood to secure reliability and durability of its furniture. From wood seasoning and processing, to robotic painting, polishing, crafting and finishing, the Company’s factory is a marvel of innovation and technology to achieve mass production capability, operational efficiency and reduce overheads. The Company has mitigated risks associated with contractual jobs by focusing on the retail market. It has been successful in evolving its business portfolio and enjoys a healthy mix between retail and corporate sales. The assigned ratings take into account the Company’s state-of-the-art facilities, national footprint, brand’s value, and mega-scale projects. Further, it draws direct comfort from forecasted revenue, growth and margins as depicted in Company’s financial projections. As per management accounts for financial period ended June, 2022; the Company has witnessed topline growth of ~14.2% owing to volumetric growth and better prices. Further, segment mix and diversified product line bode well for the Company to gain a competitive edge. Interwood Mobel enjoys upright margins on back of targeting mid-to-high end customers. Financial risk profile of the Company is considered adequate with steady coverages, working capital cycle and cash flows. The Company’s capital structure is leveraged; encompassed STBs. Further, implementation of good governance structure is required to ensure compliance at all levels and smooth running of operations.
The ratings are dependent on the Company’s ability to maintain its leading position in the industry while improving top-line and margins amid changing business environment. Meanwhile, better financial profile through effective working capital management, maintaining strong coverages and sufficient cushion to borrow at trade level will be critical for ratings.
Interwood Mobel (Private) Limited was incorporated in 1974 by Mr. Farooq Ahmed Malik. The Company holds over four decades of legacy in the manufacturing and sale of furniture & allied items. It primarily operates through nine retail outlets concentrated in Karachi (2), Lahore (2), Islamabad (2), Peshawar (1), Rawalpindi (1) and Gujranwala (1), with dealer networks established in other cities. Major shareholding (~99.9%) of the Company lies with Farooq Family. Mr. Farooq Ahmed Malik, the founder, and his wife Mrs. Ghazala Farooq own ~17% & ~16%, respectively. Each of their sons, Mr. Omar Farooq and Mr. Ali Farooq, own ~33% stake in the Company. Remaining shareholding (~0.1%) is held by close relatives of the family. The Company is headed by Mr. Omar Farooq, who is the Chief Executive Officer. He is ably supported by a professional management team.