Air Link Communication debt remains alarmingly high as the company continues depending on billions in short-term borrowings and Sukuk financing.
KARACHI: The Pakistan Stock Exchange (PSX) has received a Shariah Compliance Disclosure from Air Link Communication Limited (ALC) regarding its interim financial statements for the six-month period ending December 31, 2025. The disclosure, indicates that the company is carrying an astonishing amount of Rs. 29.32 billion in short-term borrowings, a figure that exposes just how heavily Pakistan’s largest smartphone distributor leans on debt to keep its operations running.
ALC’s short-term borrowing portfolio splits into two categories. The company holds Rs. 12 billion in Sukuk, Shariah-compliant, privately placed, secured instruments issued on a six-month tenor. These Sukuks carry profit at the rate of 6-month KIBOR plus 1.75%. Beyond the Sukuk pile, ALC carries Rs. 17.32 billion in conventional commercial bank facilities, down marginally from at 30th June 2025, amounting to 19.07 billion dollars.
Also Read: Bank Makramah Posts Rs714 Million Loss Despite Signs of Recovery
The commercial banks borrowing has markups ranging from 1 month KIBOR to 3 month KIBOR at spread rates between 1.25% and 3.0% above the benchmark without a floor and. These facilities sit secured against a joint pari passu charge on the company’s present and future current assets, meaning lenders hold first claim on everything ALC owns and will own.
Shariah Compliant — But Still Massively Leveraged
Out of the Rs. 17.32 billion in commercial bank borrowings, Rs. 5.75 billion comes from Shariah-compliant banks down from Rs. 5.9 billion at June 30, 2025. The company directs proceeds from both the Sukuk issuances and Shariah-compliant bank borrowings exclusively toward working capital financing.
That detail matters. The working capital finance means that the ALC finances its everyday activities, which include inventory management, trade receivables, and business expenditures, using short-term loans rather than self-generated cash flows. In view of the volatile nature of the smartphone distribution market in Pakistan, where currency depreciation and duties reduce profits, short-term borrowing should be critically analyzed by investors.
Total short-term borrowings stood at Rs. 29.57 billion as of June 30, 2025. By December 31, 2025, that figure dropped only marginally to Rs. 29.32 billion a reduction of just Rs. 246 million over six months. That near-flat trajectory suggests ALC makes no meaningful progress in reducing its debt load despite operating in a period of declining interest rates, where KIBOR dropped significantly from its 2024 peak.
What This Means for ALC Investors
ALC’s disclosure complies with PSX Regulations 5.6.9A and 5A.13.(d)(iii), satisfying the exchange’s Shariah screening requirements. Regulatory compliance, however, does not erase the underlying financial risk. With Rs. 29.32 billion in short-term obligations sitting against current assets pledged to lenders, investors must ask a critical question: how much financial headroom does Air Link Communication actually have left?
The Shariah label provides comfort to faith-conscious investors. The balance sheet provides considerably less.
