The Pakistan Credit Rating Agency Limited
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Uswa Sikandar

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

Rating Type Entity
(15-Dec-22 )
(17-Dec-21 )
Action Upgrade Maintain
Long Term A- BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Ghulam Rasool & Co' holds a prominent position in the construction industry since several decades. It was established by Mr Ghulam Rasool in 1970 and later inherited by his three sons and their respective families who are the joint owners of the business. The shareholders have stakes in multiple companies simultaneously, thus strengthening the group's financial strength. The company has delivered multiple, public and government projects, and usually embarks upon large infrastructure projects in collaboration with different foreign JV partners, which in their own right are established institutions. The Company has a no-limit contract license and is focused mainly on specialized nature projects on civil construction, irrigation works, and hydel-power development projects. The functional and reporting responsibilities of the management team are demarcated. The control environment needs to be strengthened. 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 has improved. Debt is procured for project financing in nature of short-term working capital. Leveraging also includes non-funded exposure which is an integral part of the business model. Equity base of company is strong; the same along with ongoing projects with foreign partners spanning over a number of years and ensuring revenue generation in the coming years, support the financial risk profile of the Company. It is further boosted by proficient WC cycle, which reflects on improving operational efficiency of the company. The company’s revenue in FY22 surged multiple times and was recorded at PKR 15.36 billion, owing to stout projects pipeline, hence the upgrade.
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 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. Improving governance and internal controls framework would have further positive connotation for the ratings.

About the Entity
Ghulam Rasool & Co was incorporated as a private limited company in 1984. The executive and operational roles are held by Mr. Majeedullah and Mr. Faisal Hassan who are also the board members and 'Active' shareholders. Mrs. Ashraf Bibi and Mr. Sheheryar Khan have also been recently appointed as board members, thus taking the total number of board members to four. 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.