PACRA Updates Entity Ratings of Ghulam Rasool & Company (Pvt.) Limited | Positive Outlook

Ghulam Rasool & Company (Pvt.) Limited (“the Company” or “GRC”) ' 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 functional and reporting responsibilities of the management team are demarcated; however, the control environment needs improvement. 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. It holds a no-limit contract license from the Engineering Council of Pakistan and specializes in civil construction, with a particular focus on irrigation systems and hydropower development. The Company follows a strategic approach of building assets, required for its operations as well as investment purposes, through surplus cash. The Company’s financial risk profile has strengthened, supported by sustained and consistent topline growth of approx. PKR 12bln in FY24 (FY23: PKR 12.9bln), achieved through securing sizable contracts, spanning over number of years. The Company's gross profit margins have improved, rising to 20% in FY24 from 16% in FY23, despite challenges in the construction sector, including reduced PSDP spending and inflationary pressures that have slowed the economy. The current project pipeline, along with several mega projects for which GRC has technically qualified and is awaiting award decisions, provides confidence in the Company’s ability to sustain or even improve its financial performance. Management remains optimistic about securing these projects, which is a key factor contributing to the “Positive Outlook” assigned to its ratings. The Company maintains limited financial exposure and operates with mild leverage, utilizing a mix of funded and non-funded banking lines to support its operations. Its equity base remains modest, standing at PKR 15 billion in FY24. The Comfort is also drawn from the sponsors’ extensive experience and expertise in the hydropower sector, where development activity continues to grow and is expected to remain strong.
Going forward, the timely completion of existing contracts, the successful award of new projects as expected, and sustainable revenue stream will be crucial for significant growth and are considered positive factors for the ratings. The Company has undertaken various initiatives to strengthen both internally and externally, including improving reporting frequency through the recently implemented ERP system. Additionally, initiatives to enhance governance and internal controls are underway, which will improve its longevity and would have further have positive connotation for the ratings.

About the Entity
GRC was incorporated as a private limited company in 1984. The executive and operational roles are held by Mr. Majeedullah and Mr. Faisal Hassan, both key shareholders and the board members. Historically specializing in irrigation canals and river bridges, GRC is now expanding its focus to include hydropower projects. Its scope of work includes the construction of roads, bridges, tunnels, canals, and hydropower stations. Notable projects include the Kacchi Canal KC-05, an 84 MW hydropower plant in Kalam, 12 MW projects in Karora and Jabori, the Daral Khwar power plant, the Pehure Canal in KPK, the Earthquake Memorial Bridge in Muzaffarabad, and the Lowari Tunnel, along with international projects in Ethiopia, UAE, and Afghanistan.