Zahir Khan & Brothers (ZKB or the Firm) is a Partnership Firm established in 1970 and registered with the Registrar of Firms, Balochistan, under the Partnership Act, 1932. With a long-standing presence in Pakistan’s construction sector, the Firm has undertaken projects across the country. As part of its strategic vision to transition towards full corporatization, ZKB has taken an initial step by incorporating ZKB Construction Private Limited, a wholly owned corporate subsidiary of the Firm.

Zahir Khan & Brothers (ZKB) commenced operations in the early 1970s as a modest construction firm in Balochistan and has since evolved into one of Pakistan’s leading infrastructure development companies. Over more than five decades, the Firm has expanded its footprint nationwide, developing a diversified portfolio that spans highways, motorways, metro rail and bus systems, public sector buildings, and large-scale industrial and infrastructure projects. ZKB has also demonstrated the capacity to collaborate with international partners through joint ventures, enabling the execution of complex and technically demanding projects. Throughout its history, the Firm has established a strong reputation for delivering projects efficiently, within stipulated timelines and budgets, while adhering to high standards of quality and professionalism.

ZKB specializes in a comprehensive range of construction and infrastructure services, encompassing roads and highways, bridges and overhead structures, residential and commercial buildings, canals and tunnels, water and irrigation systems, dams and flood control works, oil and gas pipelines, as well as industrial and prefabricated structures. The Firm is duly registered with the Pakistan Engineering Council (PEC) and holds a ‘CA’ class license with a ‘NO LIMIT’ designation, authorizing it to execute projects of all scales across Pakistan. ZKB maintains a robust fleet of modern construction equipment; including pavers, power curbers, asphalt plants, bitumen distributors, transit mixers, rotary drilling machines, gantry cranes, straddle carriers, and milling machines, enabling efficient and high-quality project delivery. Its workforce comprises a core team of permanent professionals, supported by additional skilled labor engaged on a project-specific basis to ensure operational flexibility and responsiveness.

ZKB is a fully family-owned business with four partners. Mr. Zahir Khan, the founder, holds the majority stake of 51%, Mr. Mohabbat Khan owns 41%, while Mr. Suleman and Mr. Samiullah each hold a 4% stake.

The Firm’s partnership structure has remained stable for decades, with no changes anticipated in the near term. Recent initial steps toward corporatization, including the establishment of ZKB Construction (Private) Limited, are expected to further strengthen the Firm’s long-term institutional stability. Nonetheless, the development of a formal succession plan would serve as an additional factor in reinforcing continuity and stability.

The sponsoring family has been in the construction industry for many decades. The sponsors possess a comprehensive understanding of the business, as they are actively involved in the day-to-day operations.

The sponsors of ZKB exhibit a strong and well-established financial profile, underpinned by substantial equity contributions and a long-standing track record of supporting the Firm’s operations without reliance on long-term debt, thereby reflecting sound financial stability. The Firm has historically met its funding requirements through internally generated cash flows and partner equity, while the sponsors retain the financial capacity to provide additional support, if required. This solid equity base, coupled with the sponsors’ extensive asset holdings, including ownership of multiple properties across various locations in the country that may be offered as collateral, strengthens the Firm’s overall financial position and supports its ability to execute large-scale and complex infrastructure projects.

The overall control of the Firm resides with its four partners. In addition to the CEO, the other three partners also hold executive roles. The existing governance structure provides adequate operational oversight. Moreover, initial steps toward corporatization, including the establishment of ZKB Construction (Private) Limited, reflect a positive direction toward institutionalization. Nevertheless, as the Firm continues to operate as a partnership entity, there remains scope for gradual enhancement through the adoption of a more structured corporate governance framework, which could further strengthen operational efficiency and accountability.

ZKB’s governance and leadership structure is anchored by a core group of seasoned partners and executives who provide strong strategic oversight and effective operational direction. The Firm is led by Mr. Zahir Khan, Founder, Chairman, and Chief Executive Officer, who spearheads the organization’s long-term vision and strategic objectives, supported by nearly five decades of extensive experience in the construction industry. His leadership has been instrumental in shaping the Firm’s sustained growth, operational resilience, and strong market standing. Supporting him are experienced partners in key executive roles, including Mr. Mohabat Khan, Vice Chairman, who brings deep construction-sector leadership experience; Mr. Suleman Khan, Director – North, responsible for overseeing regional operations and driving project expansion across the northern corridor; and Mr. Sami Ullah Khan, Director – Central, who provides strategic guidance on project execution and portfolio growth in central regions. Collectively, the partners possess significant industry expertise, with three partners each having approximately a decade of hands-on experience, strengthening the Firm’s operational depth, governance framework, and project execution capabilities.

Currently, there are no formal committees within the Firm. All partners hold management positions, which limits the potential for impartial oversight. However, the partners actively participate in the planning and execution of business projects and regularly oversee the Firm's operations.

M/s. RSM Avais Hyder Liaquat Nauman Chartered Accountants serves as the external auditor for the Firm. The auditors have issued an unqualified audit opinion on the financial statements of Zahir Khan & Brothers for the year ended June 30, 2025, reflecting the Firm's compliance with applicable financial reporting standards.

ZKB has a well-documented organizational structure with operations divided into seven key departments: (i) Bidding, (ii) Information Technology, (iii) Contract Management, (iv) Construction, (v) Admin & HR,  (vi) Finance, and (vii) Treasury. Each department has clearly defined responsibilities, ensuring efficient management and coordination across the Firm.

Mr. Zahir Khan, Founder and CEO, leads the Firm’s strategic decisions, especially in bidding and acquiring government contracts. Project execution is managed by Mr. Mohabbat Khan, Director Technical Services and COO, with over 15 years of construction experience. The core management team includes Mr. Atif Iqbal, Head of Financial Reporting and Accounting, and Mr. Kamran, Head of Treasury, who brings strong banking expertise. Together, they ensure sound governance, operational efficiency, and robust financial management. Mr. Usman Khan, associated with ZKB for over seven years, initially led the real estate portfolio, completing landmark projects like Aura Square and MOI Shopping Mall in Islamabad. Currently, he serves as Director Urban Development along with Director Projects, overseeing real estate and infrastructure development.

The management functions are clearly defined, enabling the Firm to effectively achieve its goals and objectives. The board members provide close oversight to ensure successful project execution and actively participate in the preparation of project bids. Regular management meetings are held to discuss Firm affairs; which are formally documented.

ZKB currently utilizes SARP (ERP/Oracle) software, which has been customized specifically for the construction industry. The software efficiently manages key financial functions, including tracking receivables, payables, general ledger, and accounts, providing the Firm with comprehensive financial oversight and control.

The Firm adheres to strict quality control standards, understanding their critical importance in the construction industry, particularly when working with international donor agencies. Additionally, ZKB maintains a comprehensive Management Information System (MIS) that enables the management to monitor activities across various project sites. While an internal control system is in place, ongoing reviews by the partners are essential to further enhance the effectiveness of management and ensure continuous improvement.

Pakistan’s construction sector is exhibiting a gradual recovery, supported by improved execution under the Public Sector Development Programme (PSDP) in 1HFY26, with utilization rising to approximately 21% of the federal allocation of PKR 1.0 trillion, translating into actual spending of around PKR 210 billion by end-December 2025. This marks a notable acceleration from 9.2% (PKR 92 billion) utilization through November. Infrastructure projects, particularly transport and communications, accounted for the bulk of spending, driving a 42% YoY increase in development outlays during 1HFY26. Despite continued constraints on non-PSDP development spending due to tight fiscal policy and IMF commitments, prioritized infrastructure projects continue to offer selective opportunities for construction firms. The sector contributed 2.27% to GDP in FY25, recording growth of 6.61% following a challenging FY24. Over the medium term, supported by urbanization, population growth, CPEC-linked investments, and rising hydropower demand, the construction sector is projected to grow at an average annual rate of approximately 4.6% during FY26–FY29, assuming gradual macroeconomic stabilization.

Out of the 10,000+ firms registered with the Pakistan Engineering Council as Constructors/Operators, only approximately 100 (1%), including ZKB, hold the prestigious 'CA' category (no limit) license. This license allows them to be included on the pre-qualification list of approved constructors. Additionally, ZKB's history of successfully delivering projects funded by international donors, along with its joint ventures with internationally recognized contractors, positions the Firm among the top-tier contractors operating in Pakistan.

Driven by a strong project pipeline, the Firm achieved a top-line revenue of PKR 37,570 million in FY25, up from PKR 20,851 million in FY24 and PKR 11,207 million in FY23, demonstrating consistent growth. This revenue increase is supported by several major ongoing projects. With numerous projects in the bidding and prequalification stages, ZKB’s revenue is poised for further growth in the coming years.

In FY25, the Firm’s gross and operating margins declined sharply to 16.3% and 13.4%, respectively, compared to 26.0% and 22.9% in FY24. This contraction primarily reflects the project execution mix and stage of completion during the year, as construction margins typically vary across project phases, with higher upfront costs, competitive bidding pressures, and cost escalation being absorbed earlier in the project lifecycle, while margins normalize upon project completion and certification. Consequently, net margins also weakened significantly to 12.8% in FY25 from 42.2% in the previous year, underscoring the impact of compressed operating profitability amid the timing and nature of construction-related cash flows and cost recognition.

ZKB's management aims to establish a sustainable presence in the market by transitioning from a partnership to a corporate structure entity in the near future. As an initial step, the private company "ZKB Construction Private Limited" has been established. The Firm is actively pursuing geographical diversification across its business operations, with a steady pipeline of bids for new projects aimed at supporting revenue growth, if awarded. Notably, approximately 70% of the Firm’s projects are financed by the Asian Development Bank (ADB), which provides a significant buffer against delays in fund disbursements typically associated with government-sponsored projects, particularly in the post-completion payment cycle. Additionally, ZKB is diversifying its business portfolio. The sponsors are entering into the sugar business after having acquired a sugar mill. Furthermore, the Firm has made strategic long-term investments through its balance sheet by purchasing shares in Flow Petroleum, Pak-China Fertilizer, and Mubarak Center in Lahore, further diversifying its business profile.

The Firm primarily manages its working capital through customer advances, supplemented by short-term borrowing facilities. As of FY25, the total available funded facilities stood at PKR 2,650 million, with an overutilization of PKR 108 million, along with 72.67% utilization of performance guarantee limits. Operational efficiency improved during the year, as trade receivable days declined to 66 in FY25 from 114 in FY24, reflecting improved collections. Meanwhile, trade payable days decreased to 37 from 66, indicating faster settlement of obligations. As a result, the average net working capital cycle improved to 53 days in FY25, compared to 83 days in FY24, demonstrating a more efficient cash conversion cycle.

In FY25, ZKB generated Free Cash Flow from Operations of PKR 3,638 million, slightly lower than PKR 3,960 million in FY24, supported by a gross profit of PKR 6,121 million. The interest coverage ratio improved significantly to 16.5x in FY25 from 9.9x in FY24, reflecting the Firm’s robust capacity to comfortably service its interest expenses.

In FY25, the Firm’s leverage ratio increased to 3.4% from 1.8% in FY24, reflecting a modest rise in debt levels. Historically, ZKB has maintained a conservative capital structure with minimal reliance on long-term debt. However, management has strategically incorporated short-term borrowings to finance working capital requirements. The Firm has fully utilized its short-term credit facilities, primarily through bank guarantees issued to secure project contracts. These borrowings are adequately collateralized by tangible assets, including mortgages on residential and commercial properties owned by the sponsors.