The Pakistan Credit Rating Agency Limited
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Muhammad Mubashir Nazir

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PACRA Assigns Initial Entity Ratings to Ismail Construction Company (Pvt.) Limited

Rating Type Entity
(03-Mar-22 )
Action Initial
Long Term BBB-
Short Term A2
Outlook Stable
Rating Watch -

Ismail Construction (Pvt.) Limited (“Ismail Construction” or “The Company”) holds extensive experience in the construction industry of Pakistan for several decades. The Company has delivered multiple projects of national level in different engineering disciplines including Roads, Bridges, Canals, buildings, Water Supply Schemes, Drainage, Sewerage, and Land Development, which completion spanned a number of years. The Company has no limit license from Pakistan Engineering Council. The Company has started to undertake large infrastructure projects in collaboration with JV partners mainly Chinese to capture the available opportunities which seem promising in terms of increasing PSDP funding in the construction industry. The Company has reported a top line of PKR 6.8 billion with adequate profit margins in FY21. However, volatility associated with the award of projects and hence, sustainability of revenues, cannot be overlooked as the business pipeline is not swelled up. The business funding needs are mostly met by non-funded lines of banks and JV partners’ guarantees given on awarded projects on behalf of the Company. Resultantly, its unfunded exposure is relatively less as significant support comes from leading JV partners in bearing non-funded exposure. The equity base of the Company 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 financial risk profile. Financial metrics need to be upheld as well. Strengthening of projects pipeline is also essential for the ratings. Improvement in governance is also important for future ratings.

About the Entity
Ismail Construction (Pvt.) Limited was established by Mr. Syed Sultan Sikandar as a sole proprietor entity in 1966 which got converted by his sons into a private limited company later in 2006. The executive and operational roles are held by Mr.Syed Muhammad Ismail and Mr. Sana Ullah who are also the board members and are equal shareholders. M/s. Hafiz Asim & Co. Chartered Accountants, are the external auditors of the Company. The auditors expressed an unqualified audit opinion on the financial statements of the Company for the year ended June 30, 2021. Mr.Syed Muhammad Ismail is the chief executive officer (CEO) of the Company and is supported by experienced team members. Significant projects to its credit include Construction of Central Prison, Mardan, establishment Of Agriculture University Swat, and Construction of working Folk Grammar School at Kohat.

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.