The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA maintains entity ratings of Matracon Pakistan (Pvt) Limited

Rating Type Entity
(10-Oct-23 )
(14-Apr-23 )
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch Yes -

Matracon Pakistan 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 international JV partners including Chinese, 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. During 1HFY23 the Company posted a topline of PKR 5.67bln as against PKR 5.56bln in 1HFY22. However, margins have improved in the period under review reported to be 19% as against 10% in SPLY. The growth in margins is due to the realization of revenue of the projects whose construction was completed in FY22. However, the slowdown in the progress of the projects and recoveries was witnessed due to the upsurge in basic raw material prices and increased policy rates. The Company has requested the cost escalation against the already-in-hand projects, the negotiations of which are under way. Adding new projects in current project bank remains imperative for the ratings. The business funding needs are met by non-funded lines of banks. Equity base of Matracon is adequate especially when compared with the non-funded obligations assumed by the Company.
The ratings are dependent on the long-term 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. During the period under review, Ratings are maintained keeping in view operational projects that are ensuring revenue stream for the next financial year however, rating watch depicts dried up pipeline of projects. To improve the Ratings, strengthening of projects pipeline and collection efficiency, as projected, will remain crucial. Any prolonged downturn in subdued business volume can have a detrimental effect on the ratings. 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 executive 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. Clarkson Hyde Pakistan is the external auditor of the Company. The auditors have expressed an unqualified audit opinion on the financial statements of Matracon Pak for the year ended June 30, 2022.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 ~49bln) out of which projects worth of PKR ~30bln has been completed whereas remaining projects worth of PKR ~10.26bln is in progress with other Government and semi-Government Departments.

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