The Pakistan Credit Rating Agency Limited
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Ayesha Malik

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PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited

Rating Type Entity
(27-Dec-19 )
(28-Jun-19 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect Dawood Hercules Corporation Limited's ("DH Corp" or "the Company") very strong profile as an investment company with investments in diversified sectors mainly through Engro Corp. DH Corp has structured oversight process in place for monitoring and making new investments. Sizeable liquid funds, accumulated from the divestment in Hub Power Company Limited (HUBCO), are held in a money market instruments indicating very strong liquidity. Recently, the Company started investment in blue chip market securities exposing it to market volatility. DH Corp is exploring new investment avenues to add to its portfolio. Meanwhile, DH Corp is expected to have a steady and increasing dividend stream from it's subsidiary, Engro Corp, as underlying business continues to perform well. The business acumen of the sponsoring family and strong governance practices provide support to the ratings.
The ratings depend on the managements ability to sustain low risk profile and follow prudent investment policy by the Company. At the same time, maintaining strong financial profile and liquidity remains important. Any significant increase in debt and/or prolonged downturn in invested companies will impact the ratings.

About the Entity
Dawood Hercules Corporation is a public listed company incorporated in 1968. The principal activity of the Company is to manage investments including its subsidiary and associated companies. Dawood Group (Dawood Family and associates) holds 34% stake in DH Corp through its’ corporate entities (20%) and individuals (14%). Other related foreign companies hold 54% shareholding in DH Corp, 9% is held by corporate and financial institutions whereas around 3% is held by the general public. The BoD is chaired by Mr Hussain Dawood, the patriarch of Dawood family. Mr. Inam-Ur-Rehman, is serving as CEO since Dec ’16.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.