PACRA Maintains Entity Ratings of Ismail Construction Company (Pvt.) Limited

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 the 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 infrastructure development in the Country. During FY22, the Company is able to just sustain its topline in line with previous years and reported a revenue of PKR 7.03bln (FY21: PKR 6.8bln, FY 20: PKR 6.5bln). The company’s gross margins also remain range bound FY 22: 13.1% (FY21: 11.6%, FY 20: 10.2%), despite the increase in the overall cost of project completion due to inflationary pressure, and highly competitive bidding in large contracts. Liquidity in terms of cash flows remained suppressed due to limited funds from operations, though the working capital management remained strong. However, volatility associated with 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 remain exposed to the Company’s presence in the cyclic sector owing to political instability, and a volatile economic environment. The ratings will remain dependent on upholding financial metrics involving the timely completion of key commercial projects without any significant cost and time overruns. In addition, sustaining the topline with collection efficiency will remain imperative. Improvement in governance is also important and needs to be strengthened 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 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, 2022. 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.