Air Link Communication Limited ('Airlink' or 'the Company') is a public limited company, incorporated in January 2014 under the repealed Companies Ordinance 1984 (now the Companies Act, 2017). The Company has been listed on the Pakistan Stock Exchange (PSX) since September 2021. The registered office of the Company is located at 152/1-M, Quaid-e-Azam Industrial Estate, Kotlakhpat, Lahore.

Airlink commenced business as a partnership firm in 2010, engaged in the import & distribution of IT products, particularly mobile phones, & related services. In 2014, a new private company was incorporated to take over the business of the partnership firm running as a family business. Subsequently, the entire business was transferred to the Company's books in 2018. Later, Airlink converted its status to a Public Unlisted Company in April 2019. and eventually was listed on PSX in September 2021.

Airlink's core operations include production of Tecno smartphones along with distribution of mobile phones and allied products of the leading brands in the mobile industry, including; Xiaomi, Techno, Samsung, iPhone, and Itel. Furthermore, Airlink partnered with Xiaomi to manufacture and distribute Xiaomi mobile phones & accessories in Pakistan through its wholly owned subsidiary "Select Technologies (Private) Limited".

The majority stake rests with the members of the sponsoring family, holding ~73.43% of shares. Additionally, ~8.07% is owned by the general public, ~5.75% is held by foreign companies, ~5.91% is held cumulatively by banks, development finance institutions, non-banking finance institutions, insurance companies, modarabas and mutual funds, ~2% is held by directors, their spouses and minor children whereas the remaining ~4.83% is owned by others.

The ownership structure of the Company is seen as stable as the majority stake of the Company is held by the members of the sponsoring family, and no significant changes are expected in the ownership structure of the Company in the foreseeable future.

Mr. Muzzaffar Hayat Piracha, the primary sponsor, has been at the helm of the Company since its inception. He is a seasoned professional with a deep understanding of the industry. His strong leadership capabilities are evidenced by the successful strategic partnerships the Company has cultivated over the years. His business acumen is thus considered strong.

Owners of the Company do not have any strategic stake in other companies. However, Mr. Muzaffar Hayat owns commercial and residential real estate. Financial strength is, therefore, considered adequate.

The Board of Directors (the Board) comprises seven members: two non-executive directors (including the chairman and a female director), two executive directors (including the CEO), and three independent directors.

Members of the Board are seasoned professionals and bring extensive multifunctional experience across multiple sectors. Mr. Aslam Hayat Piracha is the chairman of the Board and possesses over 5 decades of business experience with core speciality in imports and exports. He is keenly involved in overseeing the systems and controls of Airlink. Furthermore, the independent directors are well regarded business experts having bringing exposure from diverse sectors.

The Board meets at least quarterly to oversee the management's performance and to ensure alignment of the Company with its strategic goals. During FY24, four meetings of the Board were held, and the attendance of directors remained strong. Minutes of the meetings are documented appropriately, and action points are communicated with the relevant stakeholders. The Board has also established two committees: i) Audit Committee, and ii) HR and Remuneration Committee. These committees further enhance the Board's effectiveness by enabling focused oversight and efficient decision making.

M/S BDO Ebrahim & Co. Chartered Accountants, listed in the category ‘A’ on SBP's panel of auditors, are the external auditors of the Company. They have expressed an unqualified opinion on the Company’s financial statements for the year ended June 30th, 2024.

The Company has a well-defined organizational structure segregated into eight functional departments including: Human Resources, Production, Retail, Operations, Internal Audit, Marketing, Distribution, and Accounts & Finance. All the departments are led by professional Heads of Departments who report directly to the CEO. Currently, all the key positions are filled.

Mr. Muzaffar Hayat Piracha leads the management team as the CEO of the Company. He has a Master's Degree in Business Administration and possesses over two decades of multifaceted leadership experience across diverse sectors with exposure to local and European markets. He is supported by a management team of seasoned professionals bringing extensive expertise and experience. Notably, Mr. Adnan Aftab, the CEO of Select Technologies (Pvt.) Ltd., has a Master's degree in Manufacturing Engineering and possesses over three decades of experience in manufacturing. Furthermore, Mr. Nusrat Mahmood, the CFO, is a distinguished Management Accountant and Chemical Engineer with over two decades of experience across multiple industries including textiles, fertilizers, and telecommunications.

There exists a multi-layered hierarchy within each functional department. The roles and responsibilities of each cadre are properly defined and documented which strengthens the effectiveness of the management. Furthermore, six management committees have been established namely, i) Credit Committee, ii) Risk Management Committee, iii) Sale Control Committee, iv) Cash Management Committee, v) Operational Control Committee, and vi) Business Plan Committee, which help in improving overall operational efficacy by enabling focused decision making and bridging inter-departmental gaps.

The Company has installed SAP, an ERP solution, as its information system, which enables the Company to maintain a sound reporting system.

An internal audit department is in place which reports directly to the Board’s audit committee. MIS reports for senior management are generated frequently and are detailed in nature. Many reports, including the following, are generated for each business unit: i) region-wise business partner report including adjustments, ii) daily stock report for all warehouses, and iii) product-wise report of region & corporate limits.

Pakistan has been one of the fastest-growing cellular markets. The country’s tele density rose from 6% in FY04 to a high of 80% as of FY24. The devaluation of PKR against the USD during the preceding year and the rise in duty structure amplified the prices of imported phones, hence putting pressure on the demand for high-end mobile phones. During 9MCY24, the local production of mobile phones was recorded at 22.59mln units comprising 8.73mln 2G devices and 13.86mln smartphones while commercial imports were recorded at 1.17mln units. compared to ~21.28mln devices manufactured locally and ~1.58mln imported during CY23. Currently, there are 4 top distributors in the country. Airlink ranks number one on the list and holds ~22% of the market share.

Airlink is among the top 4 mobile phone distributors in the country. The Company is working with the world's top brands of mobile phones. In FY24, Xiaomi (52%), Techno (44%), and Samsung (4%) were among the highest contributors to the Company's distribution volume. Furthermore, the Company is the sole manufacturer of Xiaomi smartphones in the country and also manufactures Tecno smartphones signifying prominent position of the Company within the mobile phone manufacturing and distribution industry.

In FY24, Airlink recorded a consolidated topline of PKR 129,742mln (FY23: 36,934mln) reflecting a substantial growth compared to last year, on account of ease in import restrictions on CKDs of mobile phones resulting in improved volumes in the mobile phones assembling segment enabling the Company to utilize its optimal capacity. During the year, the assembly segment contributed ~PKR 93,346mln (72%) whereas the contribution from the distribution segment remained ~PKR 36,396mln (28%). Furthermore, the diversity of associated brands with the distribution segment including Samsung, Tecno, Itel, Xiaomi, TCL/Alcatel, iPhone and Realme augments the revenue stream and safeguards against any uncertain fluctuations in the demand or supply of any brand. During 1QFY25, the Company’s sales declined by ~40% on an annualized basis, on account of inventory build-up and dampened demand due to price increase on the back of additional tax implications.

A slight decline in the gross profit margin was observed during FY24 as it decreased to ~7.6% from ~9.6% in FY23, primarily attributable to the effect of higher pricing of the imported components/parts. However, the net profit margin improved to ~3.6% during the year compared to ~2.6% in FY23, primarily on account of better cost management and capacity utilization enabling the company to achieve economies of scale. During 1QFY25, further improvement in the profitability matrix was observed as reflected by the gross profit margin of ~9.8% and net profit margin of ~3.8%.

Airlink is among the largest distributors of mobile phone and related devices in the country. Over the years, the Company has steadily strengthened its business profile by cultivating partnerships with globally renowned brands to ensure growth and sustainability. In 2022, Airlink joined hands with Xiaomi Global to assemble and distribute its mobile phones. Recently, the Company has finalized an agreement with Acer Inc. for the production of Acer laptops and tablets. Furthermore, the Company is also diversifying its product range by commencing assembly of Xiaomi Smart Tvs. These initiatives are expected to further solidify the Company's prospects.

The Company's working capital needs stem primarily from funding its inventory in the assembly and distribution segments. During FY24, average gross working capital days significantly decreased, and were recorded at ~30 days compared to 94 days in FY23, primarily attributable to robust inventory management. This also resulted in decreased average net working capital days of the Company to ~18 days in FY24 compared to ~70 days in FY23. However, the working capital cycle days increased during 1QFY25 on account of inventory build-up to meet the demand of Xiaomi Pakistan (Pvt.) Ltd.

Free cash flow from operations (FCFO) increased to PKR ~8,578mln in FY24 compared to PKR ~2,874mln in FY23, on account of an increase in profit before tax. This resulted in the improvement in core coverages of the Company as reflected by the interest coverage ratio of 3.3x during FY24, compared to 2.1x in FY23. Debt payment capacity currently remains comfortable as reflected by the Debt payback ratio of 0.5 times in FY24 compared to 2.1 times in FY23. Furthermore, the Company’s interest and debt coverages remained intact during 1QFY25.

The total debt of Airlink increased during the review period. As of Sep-24, it was recorded at PKR ~16,124mln (FY23: PKR ~8,302mln FY22: PKR ~8,021mln). The Company has a leveraged capital structure as reflected by the leverage ratio of ~53% as of Sep-24. (FY23: 40.4%, FY22: 40.8%, FY21: 53.3%). The debt book is dominated by short-term loans, which constitute ~88% of the total debt portfolio, and are being utilized to fund the growing working capital needs.