Etimaad Engineering (Pvt.) Limited

CREDIT RATING REPORT | Aug-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
19-Aug-25 Withdraw -
19-Aug-24 A- A2 Stable Maintain -
24-Aug-23 A- A2 Stable Maintain -
26-Aug-22 A- A2 Stable Upgrade -
26-Aug-21 BBB+ A2 Stable Upgrade -
About the Entity

Founded in May 2007, Etimaad is an integrated engineering and contracting firm offering turnkey, retrofit, and debottlenecking solutions for the power and oil & gas sectors, along with project management, industrial construction, and shutdown services. The two-member board is chaired by Mr. Mohammad Sohail Shafique, an Engineer with over 30 years of experience, holding a 25.6% stake. The Ansari family owns 37.4%, and Mr. Farooq Hussain Mughal, President & CEO, holds 26.9%. Grant Thornton Anjum Rehman serves as the Company’s external auditor.

Rating Rationale

Due to the management’s decision to discontinue the rating process, PACRA has withdrawn the ratings of Etimaad Engineering (Pvt.) Limited (‘the Company’) with immediate effect.

Key Rating Drivers

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REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Etimaad Engineering (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Etimaad Engineering Private Limited ("Etimaad" or "the Company"), was incorporated in Pakistan under the repealed Companies Ordinance, 1984 as a private limited company on May 11, 2007.


Background

Etimaad was established by a team of professionals from Descon Engineering Limited who are also the shareholders of the Company. Over the years, the sponsors have established similar businesses mainly in Saudi Arabia (subsidiary) and Qatar (associate). In 2014, Etimaad had to divest its share in Arabian Etimaad Industrial Company, for an amount of SAR 5mln (PKR 133mln), due to geopolitical tensions at Yemen border and turmoil in oil prices. The Company has completed various projects in Pakistan and overseas.


Operations

The Company is principally engaged in engineering, procurement, manufacturing, construction and project management activities.


Ownership
Ownership Structure

Mr. Mazharuddin Ansari's family directly own 37.4%, Mr. Farooq Hussain Mughal 26.9%, Mr. Mohammad Sohail Shafique 25.6% and others 10.1% stake in Etimaad.


Stability

The experienced professionals of the company provide the expertise and exposure necessary to operate efficiently, establishing it as one of the leading companies in Pakistan.


Business Acumen

The sponsors have rich industry experience and have worthy knowledge of various aspects of engineering industry.


Financial Strength

The sponsors possess a financially sound profile. While there is no explicit commitment, the key sponsor’s support for Etimaad is evident through the provision of personal guarantees to secure loans and facilities from financial institutions.


Governance
Board Structure

The Company’s board comprises only two members including the Chairman –Mr. Mohammad Sohail Shaque, and President & CEO–Mr. Farooq Hussain Mughal.


Members’ Profile

Mr. Mohammad Sohail Shaque, the Chairman, has more than two decades of experience in renowned organizations. He is an Engineer by profession and alumni of UET Lahore.


Board Effectiveness

The Company being a private company does not comply with code of corporate governance. Both of the board members carry executive roles in the management of the Company. To provide desired challenge to the management’s decisions and strengthen overall governance framework, representation of independent director is important.


Financial Transparency

Grant Thortan Anjum Rehman, Chartered Accountants, is the external auditor of the Company. The auditor gave an unqualied opinion on the Company’s nancial statements for the year ended June 30, 2024.


Management
Organizational Structure

There are a large number of reporting lines reporting in to CEO. Although this may limit strategic focus, support from senior executive members and Chairman, provides comfort.


Management Team

Mr. Farooq Hussain Mughal, the President & CEO, is finance professional and associated with Etimaad since its inception. Previously he worked as CFO in Etimaad before he elevated to the position of President & CEO in FY15. He is supported by an able and competent team of professionals.


Effectiveness

Majority of senior management has long ties with Descon Engineering Limited in the past. Project related hiring occurs as per the project’s need; therefore Etimaad tries to recruit suitable technicians and proletariat. Syed Abrar Ali Khan, the Vice President of Etimaad, is appointed to strengthen the business development. Previously, Mr. Khan served as GM Descon-UAE Business Area.


MIS

The Company has implemented an integrated system encompassing financial management, cost control, and project management to ensure seamless execution of business processes from initiation to closure, including feedback. The ERP system comprises the following modules: (i) ETest – for bid preparation; (ii) Primavera P6 – for project scheduling, monitoring, and report generation; (iii) Tanseeb – Mtrix software integrated with ETest to execute project activities and track actual progress; (iv) ETFin – a financial management system integrated with ETest and Primavera; and (v) EOffice – a platform for company-wide information sharing and collaboration.


Control Environment

The EPC industry is always prone to Quality, Health, Safety and Environmental (QHSE) issues. Therefore, Etimaad complies with applicable laws and relevant industry standards.


Business Risk
Industry Dynamics

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Relative Position

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Revenues

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Margins

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Sustainability

Etimaad’s management envisions establishing a sustainable market position by transitioning from money market-based financing to capital market instruments in the near future. The Company’s performance is closely tied to the successful execution and timely completion of ongoing projects. With a healthy project pipeline, the management adopts a balanced growth strategy aimed at securing a greater share across various business segments, ensuring long-term sustainability.


Financial Risk
Working capital

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Coverages

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Capitalization

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Aug-25

www.pacra.com

Etimaad Engineering (Pvt.) Limited

rating scale

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Aug-25

www.pacra.com

Etimaad Engineering (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Aug-25

www.pacra.com