PACRA Updates the Entity Ratings of Matracon Pakistan (Pvt.) Limited

Matracon Pakistan (Pvt.) Limited ("The Company or Matracon") is in business since 1996 and is a big name in the construction industry. It has delivered many public and private projects since its inception. Matracon embarks upon large infrastructure projects in collaboration with different local and international JV partners including Chinese and Turkish, which in their own right are established institutions. Matracon was originally focused on roads construction and drainage systems, but recently the Company is focusing on designing buildings. Recently Matracon has awarded sizeable number of projects, which span a number of years, and are in the process - providing projected revenues in the coming years, few big projects are in pipeline as well. The rating watch previously assigned has been removed is also a reflection of healthy project basket, sustained improvement in business performance with growth in revenue and margins. During 9MFY24, the Company posted a topline of PKR 8.8bln (FY23: PKR 10.5bln, FY22: PKR 14.4bln). The gross margins stood at 11.7% during 9MFY24 (FY23: 9.3%, FY22: 11.6%), Same trend is followed by the net margin. Going Forward, the revenues and margins are expected to increase. The pipeline is healthy; therein for the sake of sustainable long term growth. As the entire income is tender-based, revenue depends on the Company’s ability to bid successfully. Therefore the working capital requirement also depends on the project in execution; wherein performance guarantees are essential. The company’s leveraging indicators are adequate and has reliance on non-funded banking lines only. Equity base of Matracon is adequate especially when compared with the non-funded obligations assumed by the Company.
The Ratings are dependent on the sustainability of the business and its financial structure; sustaining a steady revenue stream and timely completion of projects without any significant cost and time overruns. In addition timely allocation of funds and collection efficiency, as projected, will remain crucial to ratings. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. Improvement in governance and control environment is also important and needs to be strengthened.

About the Entity
Matracon Pakistan (Pvt) Ltd. was established by Mr. Abdul Qadir in 1996 and later on converted into private limited company in 2006. The director roles are held by Mr. Abdul Qadir and Mr. M. Ayub who are the only board members and 'Active' shareholders. Mr. Jehanzaib Saulat has joined the Company as a CEO recently. BakerTilly is the new external auditor of the Company. Clarkson Hyde have expressed an unqualified audit opinion on the financial statements of Matracon Pak for the year ended June 30, 2023.The main expertise of Matracon Pak historically has been relevant to NHA related projects, however the focus is now being shifted towards construction of buildings and commercial towers as well. Scope of work comprises construction of roads, bridges, tunnels, canals and drainage systems. Significant projects to its credit including the mega construction projects of almost (PKR ~64bln) out of which projects worth of PKR ~37bln has been completed whereas remaining projects worth of PKR ~27bln is in progress with other Government and semi-Government Departments.