PACRA Maintains the Entity Ratings of Madiha International (Pvt.) Limited

Madiha International (Pvt) Limited (“MIPL’’ or “the Company”) is primarily engaged in the import of printer papers; sizing, cutting, and trading. MIPL is a family-owned business. The other family businesses of the Company are Bikiya Industries and IBM Pakistan. The sponsors have vast experience in the trading business of paper and manufacturing tissue papers, since 1993. The Company mainly covers the southern region of Pakistan, particularly Karachi. Due to the small business size, the sponsors are looking after the management and governance side of the Company themselves. The sponsors are one of the leading players in the imported paper market in Pakistan. During FY23, the company recorded a healthy topline driven by increased volumetric sales on the back of a strengthened customer base. Resultantly, the company scored good net profit. The financial matrix of the company is considered good. The working capital is managed through a mix of internal cash flows and short-term borrowings. At end-Jun23, the commercial short-term borrowings of the company registered a decline. A large portion of the total borrowings come from the sponsoring family and these are interest-free loans which gives a comfort on the financial costs. The equity came under pressure during FY20 due to import restrictions, however, it is gradually getting stable on the back of improving profitability. At end-Jun23, the equity base of the company witnessed a significant improvement. Hence, the leveraging of the company declined, providing a cushion to the assigned rating. During the period, in order to enhance financial transparency, the company has appointed a QCR-rated external auditor. However, the MIS of the company remains of adequate quality. Going forward, the management is changing its business strategy by selling to direct customers rather than wholesalers and distributors, this will have a positive impact on the margins of the company.
The rating is dependent on sustaining its market share and prudent management of the working capital. While maintaining sufficient cash flows and coverages are essential for the ratings. Any significant change in margins and coverages will impact the ratings. Moving forward, improvement in the governance and management framework remains of vital importance.

About the Entity
Madiha International (Pvt.) Limited was established in 2016 as a private limited Company registered with SECP under the Companies Act, 2017. Its main office is located in Karachi. MIPL is part of family-owned companies. The Company is owned by four shareholders having a 25% stake each: i) Mr. Usman Saleem Bikiya. ii) Mr. Muhammad Bilal and the remaining 50% with other family members. The Company is involved in the import of printer papers and distribution in the local market. Mr. Muhammad Bilal is the CEO and provides external assistance to the Company over financial matters. Mr. Usman Bikiya is one of the directors of the Company.