The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Maintains Entity Ratings of Ghulam Rasool & Company (Pvt.) Limited

Rating Type Entity
(17-Dec-21 )
(18-Dec-20 )
Action Maintain Upgrade
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Ghulam Rasool & Co' has held a commendable position in the construction industry for several decades. The subsequent three generations of the sponsoring family are the joint owners of the business. The functional and reporting responsibilities of the management team are demarcated. The control environment needs to be strengthened. The company has delivered multiple, public and government projects, usually embarks upon large infrastructure projects in collaboration with different Chinese JV partners, which in their own right are established institutions. The Company has a no-limit contract license and was originally focused on civil construction and irrigation works, but recently, increasing its focus on hydel-power development. The company has a defined strategy of building assets, required for its operations as well as investment purposes, through surplus cash. The company’s profitability & leveraging is adequate and has non-funded banking lines as well as supplier credit to facilitate its business. Debt is procured for the project financing, with reliance only on short term working capital excluding long term debt. Equity base of company is strong and is mostly represented by a portfolio of investment property indicating sound loss absorption capacity; the same along with available cash balances and ongoing projects which span a number of years ensuring revenue generation in the coming years, support the financial risk profile of the Company. The company’s profitability in FY21 moderately impacted due to an upsurge in basic raw material prices.
The ratings are dependent on the sustainability of the business and its financial structure; sustaining a steady revenue stream and financial risk profile. Financial metrics need to be upheld as well. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. The company is working on a number of initiatives to strengthen itself internally and externally, which will improve its longevity and sustainability. Recently the Company shifted to an oracle module, resultantly, audit of the Financial Statements for FY 21 got delayed, management is confident to conclude the matter by next month. The achievement and demonstration thereof would have further positive connotation for the ratings.

About the Entity
Ghulam Rasool & Co was incorporated as a private limited company in 1984. It was established by Mr Ghulam Rasool in 1970 and later inherited by his three sons and their respective families. The executive and operational roles are held by Mr. Majeedullah and Mr. Faisal Hassan who are the only board members and 'Active' shareholders. The main expertise of GRC historically has been in projects relevant to irrigation canals and river bridges, however the focus is now being moved on to hydel-power projects as well. Scope of work comprises construction of roads, bridges, tunnels, canals and hydro-power stations etc. Significant projects to its credit are i) Kacchi canal KC-05, ii) An 84 MW hydro power plant underway in Kalam, Oshu River, iii) 12MW projects in Karora & Jabori, iv) Daral Khwar power plant, v) Pehure canal in KPK (recently contracted), vi) Earthquake memorial bridge, Muzafarabad & vii) Lowari tunnal, including international projects in Ethiopia, U.A.E and Afghanistan.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.