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The Pakistan Credit Rating Agency Limited
Press Release

Date
18-Dec-19

Analyst
Usama Liaquat
usama.liaquat@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA assigns Initial Entity Ratings to Ghulam Rasool & Company Pvt Ltd.

Rating Type Entity
Current
(18-Dec-19)
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

'Ghulam Rasool & Co' has held commendable position in the construction industry for several decades. The subsequent three generations of the sponsoring family are the joint owners of the business. The functional and reporting responsibilities of management team are demarcated. The company has delivered multiple, public and government projects. GRC has a no-limit contract license. The company’s profitability & leveraging is adequate, and has non-funded banking lines as well as supplier credit to facilitate its business. Equity base of company is strong. GRC has historically contracted only government sponsored projects thus it relies on awarding of public works (Federal & Provincial PSDP + CPEC). The control environment needs to be strengthened. The company has a defined strategy of building assets, required for its operations as well as investment purpose, through surplus cash. Debt is procured for the project financing, with reliance only on short term working capital excluding long term debt. GRC was originally focused on civil construction and irrigation works, but recently the firm is increasing its focus on hydel-power development. Although revenue & profitability has been volatile, multiple mega projects are in pipeline which shall provide a stable revenue stream over the next two years. GRC usually embarks upon large infrastructure projects in collaboration with different chinese JV partners, which in their own right are established institutions. However,the recent profitability is on the lower side,on a peer-to-peer comparative scale due to decrease in business volume in the recent past.
The ratings are dependent on the sustainability of the business and its financial structure; sustaining a steady revenue stream and financial risk profile. Financial metrics need to be upheld as well. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. Good corporate governance practice is considered essential. The positioning of the company in the industry and adherence to sound financial discipline is pivotal for the ratings.

About the Entity
Ghulam Rasool & Co was incorporated as a private limited company in 1984. It was established by Mr Ghulam Rasool in 1970 and later inherited by his three sons and their respective families. The executive and operational roles are held by Mr. Majeedullah and Mr. Faisal Hassan who are the only board members and 'Active' shareholders. The main expertise of GRC historically has been in projects relevant to irrigation canals and river bridges, however the focus is now being moved on to hydel-power projects as well.
Scope of work comprises construction of roads, bridges, tunnels, canals and hydro-power stations etc. Significant projects to its credit are i) Kacchi canal KC-05, ii) An 84 MW hydro power plant underway in Kalam, Oshu River, iii) 12MW projects in Karora & Jabori, iv) Daral Khwar power plant, v) Pehure canal in KPK (recently contracted), vi) Earthquake memorial bridge, Muzafarabad & vii) Lowari tunnal, including international projects in Ethipia, U.A.E and Afghanistan.

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.