PACRA Maintains Entity Ratings of Brainchild Communications Pakistan (Pvt.) Limited

Brainchild Communications Pakistan Pvt. Ltd (hereafter referred to as ‘Brainchild’ or ‘the Company’) is an integrated service provider specializing in media communication and planning. Bee Squared Group, which includes Brainchild, Blitz, and Z2C Pakistan, has established a significant presence in the market. The ratings reflect the Company's robust business profile, underscored by its strong market position within its specific niche in the media industry. The Company has secured a prominent market placement, owing to its impressive portfolio of multinational clients, which includes renowned brands such as Nestle, P&G, Pepsi, Engro, and leading telecom companies and corporations across various segments. The media industry in Pakistan is witnessing moderate growth, influenced by the rise of digital platforms, changing consumer preferences, and the increasing availability of diverse content. This evolution reflects a shift towards more accessible and engaging media consumption. Pakistan's digital media landscape is rapidly evolving, with shifting social media preferences towards various platforms. The broadened range of services now includes media buying and planning, content production and integration, social media management, website development, and data analytics and research. The Company is poised to benefit from the shift towards digital advertising by strategically aligning its operations. The sponsor's expertise amplifies the ratings, as demonstrated by their well-crafted corporate strategies. The profitability matrix comprises income derived from both core operations and non-core operations (including financing arrangements). The income/fees derived from total billing increased by ~19% during the review period. Intercompany receivables and payables have declined, though management aims to optimize these further. In FY24, net revenue reached PKR ~1,380mln, reflecting a ~28% increase (FY23: PKR 1,076mln) due to the addition of new clients. Gross margins slightly improved to ~26% (FY23: ~24%) primarily due to better cost control. However, the net profit margin remained stable at around ~3%. The group is focusing on investing in updated technology to meet the demands of digital sphere. The concept of Brainchild serving as a liaison between clients and media relies on the timely delivery of services and payments. The cornerstone of success is effective cash management. The financial risk profile is displayed by modest coverages and cashflows, though to enhance efficiency in working capital management, it is essential to implement effective strategies, including optimizing receivables, and strengthening the internal control system/framework. Capital structure is leveraged where borrowings are mainly comprised of short-term lines from commercial banks to fund working capital needs and optimize cash management operations.
The ratings are dependent on the management's ability to sustain the market position amidst fierce competition and a changing business environment. Profit generation from core/non-core business remains critical. Meanwhile, financial metrics including but not limited to working capital management and debt coverage must be upheld.

About the Entity
Brainchild Communications Pakistan (Pvt.) Limited was established in 2010 as a Private Limited Company, specializing in comprehensive media communication and planning services. The Company is predominantly owned by Bee Squared (Pte.) Limited, based in Singapore. The Chairman, Mr. Raihan Merchant, is a recognized pioneer in the media and advertising industry. Brainchild has an affiliation agreement with Publicis Groupe. The Company is authorized to use the trademarks of Publicis Groupe divisions, specifically Starcom and Mediavest.