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The Pakistan Credit Rating Agency Limited
Press Release

Date
20-Mar-21

Analyst
Anam Waqas Ghayour
anam.waqas@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 Descon Engineering Limited

Rating Type Entity
Current
(20-Mar-21)
Action Initial
Long Term AA-
Short Term A1
Outlook Stable
Rating Watch -

Descon Engineering Ltd. is Pakistan’s leading engineering enterprise. The company, Descon Engineering Ltd., has a deep understanding of and expertise in sectors like Oil & Gas, Cement, Power, Hydro Power, and Renewable Energy, to name a few. They carry a specialization in EPC, Infrastructure, Construction, and Manufacturing apart from maintenance services and automation. As evident from the name, Descon Engineering Ltd. is part of the Descon Group. The Group possesses a wealth of experience gathered over more than four decades and has a presence in multiple sectors of the economy. The Group has a presence outside Pakistan as well, primarily across the Middle East. Foreign operations provide the same bouquet of services as offered domestically by Descon Engineering Ltd. The profitability at a consolidated level is significantly promising. Profitable operations of other group companies lend further support. Given the nature of the business, the Company is in no need of a huge capital funding base, when compared to the size of projects it undertakes. The non-funded obligations are integral to the business operations. Hence, working capital management takes precedence, wherein which the management has acquired the expertise to manage. The group has a practice of keeping liquid strategic reserve, providing a cushion against unforeseen risks. Another pivot and indeed the first one is the business pipeline. The Company has a history of sustaining its business flow. The current basket of projects is quite healthy. The Company has a very large project in the Hydro Power segment. The business is being managed by an independent and able team. The governance practices despite the unlisted status of the Company are strong; so is the control environment.
Rating is dependent upon several contracts successfully completed and upcoming mega projects undertaken by management to streamline its business for improved profitability, which is pivotal for considerable growth.

About the Entity
Descon Engineering Ltd. was incorporated as private limited company in Pakistan on December 15, 1977 and was successfully converted into unquoted public company on November 29, 1997. DEL Projects (Private) Limited owns 99.9% shares of the Company. Mr. Abdul Razzak Dawood, the key founder and ex-CEO of DEL, established this organization with an intent to build an institute. His successors Mr. Taimoor Dawood & Mr. Faisal Dawood are associated with the board as Chairman and vice Chairman respectively. The whole team possesses deep hands-on knowledge and has extensive industry experience of decades, the team is led by Mr. Nadeem Bajwah – CEO of the company; holds two decades of experience in international markets.

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.