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The Pakistan Credit Rating Agency Limited
Press Release

Date
03-Dec-20

Analyst
Muhammad Mubashir Nazir
mubashir.nazir@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 Upgrades Entity Ratings of Kingcrete Builders

Rating Type Entity
Current
(03-Dec-20)
Previous
(27-Dec-19)
Action Upgrade Maintain
Long Term BBB BB+
Short Term A2 A3
Outlook Stable Stable
Rating Watch - -

The ratings reflect the Kingcrete’s extensive experience in the civil construction and engineering business. The firm has exhibited renewed energy ever since the induction of the second generation. Over the years, Kingcrete has undertaken sizeable no of projects, which span a number of years. Some large size projects has been acquired and are in the process - providing projected revenues in the coming years as well. The equity base is strong and is mostly represented by a portfolio of investment property. The upgrade reflects Kingcrete’s sustained improvement in business performance, with growth in revenue and margin. During FY20, topline witnessed growth of 38% (FY 20: 3.0bln, FY19: 2.1bln) in Kingcrete’s. There is remarkable improvement in the gross profit and net profit on the comparative scale, aided by good repute in market and extensive experience of the management. The pipeline is healthy; therein for the sake of sustainable long term growth. The customer list portrays some of the best names in the domestic market. The Company has a track record of over four decades with strong capabilities in executing turnkey projects.
As the entire income is tender-based, revenue depends on the firm's ability to bid successfully. Therefore the working capital requirement also depend on the project in execution; wherein performance guarantees are essential. This leads to a high dependence on bank lines to fund working capital. The expansion in business is expected to reflect positively on the future risk profile of the entity. The Company is adequately leveraged and the performance of the company rests with projects in hand and timely completion.Going forward, the decrease in the finance cost, as a result in rationalized KIBOR, would provide cushion. The ratings are dependent upon the company’s ability to sustain and improve its business profile in the wake of challenges in current diluted economic scenario. Herein, effective and prudent management of financial risk indicators remain important.
The ratings are dependent on the sustainability of the business and financial structure of Kingcrete. Governance and corporate structure requires upgradation and improvement and so does the financial disipline. The management has an express mandate to corporatise its structure while improving the reporting of its financial performance on a quarterly and annual basis.

About the Entity
Kingcrete was established in 1976 and since its inception has undertaken projects in all major fields of civil engineering and allied electrical works. Kingcrete Builders is registered as a partnership concern with five partners. The founder-Mr. Nawaz A Minhas and his brother, Mr. Ijaz A Minhas are senior partners, with his two sons, Mr. M Nadir Minhas and Mr. M Sikander Minhas, and his relative Mr. Saeed A Malik, as partners of the firm. The registered office is situated at 2-C south Park Avenue, Phase-2, Defense Housing Authority, Karachi.

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.