PACRA Maintains Entity Ratings of ZKB Construction (Pvt.) Limited

The assigned ratings reflect the structured nature of ZKB Construction (Pvt.) Limited, a Special Purpose Vehicle (SPV) established exclusively to facilitate the issuance of a PKR 3.0bln Sukuk (inclusive of a PKR 0.5bln green shoe option) for Zahir Khan & Brothers (ZKB). The Sukuk proceeds are intended to support the Firm’s working capital requirements and finance the execution of new infrastructure projects. Upon receipt of funds, the SPV will extend a Shariah-compliant financing facility to ZKB on terms substantially mirroring the Sukuk obligations, thereby aligning the repayment profile of the financing facility with the SPV’s obligations to Sukuk holders. The Sukuk ratings were assigned on 4 July 2025 based on the transaction structure, projected cash flows, and information available at that time. The assessment reflected the strength of the projected credit profile, supported by the assignment of future cash flows from seven identified infrastructure projects with an aggregate expected realization of approximately PKR 26bln. These projects are primarily funded by multilateral development institutions, including the Asian Development Bank and the World Bank, supporting the quality and predictability of receivables. Additional structural protections include lien-marked collection accounts, a Debt Payment Account (DPA), and a Debt Service Reserve Account (DSRA) to facilitate timely servicing of Sukuk obligations. The transaction structure also permits the inclusion of additional eligible projects to address potential cash flow shortfalls, if required. As the proposed Sukuk has not yet been issued and a considerable period has elapsed since the initial rating assignment, the underlying project portfolio and transaction dynamics may have evolved. Nevertheless, the financial position of ZKB, as the parent entity and ultimate source of repayment, continue to be considered adequate. Given the absence of independent operations, revenue streams, or income-generating assets at the SPV level, the Company's creditworthiness remains entirely dependent on the financial strength, operational performance, and cash flow generation capacity of Zahir Khan & Brothers.
The rating also considers the SPV’s nascent stage of development, limited standalone governance framework, and absence of independently audited financial statements since incorporation. While governance oversight is largely derived from the parent entity, the common ownership and management structure ensures strategic alignment and operational continuity between the SPV and the Firm.
Any weakening in the parent’s financial profile or project execution capabilities may adversely impact the ratings.

About the Entity
ZKB Construction (Pvt.) Limited (“the SPV”) is a wholly owned subsidiary of Zahir Khan & Brothers (ZKB), established solely to facilitate the issuance of a Shariah-compliant Sukuk and onward financing to the parent firm. The SPV does not undertake any independent commercial operations and remains reliant on ZKB for its management, operations, and debt-servicing capacity. The Company is led by Mr. Suleman Khan and being incorporated in 2024 the entity, has not yet prepared standalone financial statements.