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The Pakistan Credit Rating Agency Limited
Press Release

Date
10-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 Maintains Entity Ratings of Zahir Khan & Brothers.

Rating Type Entity
Current
(10-Mar-21)
Previous
(10-Mar-20)
Action Maintain Maintain
Long Term A A
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings reflect Zahir Khan & Brothers' (ZKB) financial & business strength. ZKB is known for undertaking large infrastructure projects in collaboration with different JV partners. Over the years, ZKB has delivered huge projects, of which the completion spanned a number of years. The company faced aperiod of low contracting activity partly due to muted growth in the construction industry and later on due to outbreak of Covid-19. In the recent period, the company has added a number of projects to its pipeline. Some projects are inevitable, though in terms of revenues, they are not comparable to the previous projects undertaken by the company. The management is confident that future flow of business is improving. ZKB is led by Zahir Khan and family - a name well known in the construction industry. ZKB has experience of decades that brings expertise in understanding of business dynamics and various risks prevalent in this business. The business funding needs has historically been met by non-funded lines of banks and supplier credit but the company has procured short term borrowing lines to support working capital requirements but owing to strong equity base.
The ratings are dependent on the sustainability of the business and financial structure of ZKB. Governance and corporate structure is evolving to be complied with best practices and improved financial transparency. Although management has expressed its mandate to corporatise its structure while improving the reporting frequency of its financial performance on a quarterly and annual basis. Financial metrics need to be upheld as well.

About the Entity
Zahir Khan & Brothers is established in 1970. ZKB, as among the large players in construction sector, currently nurtures projects that span across such diverse segments of the construction industry, all of which impact the nation of Pakistan, and the progress of its people. M/s. RSM Avais Hyder Liaquat Nauman Chartered Accountants, is the external auditor of the firm. The auditors have expressed an unqualified audit opinion on the financial statements of Zahir Khan & Brothers for the year ended June 30, 2020. With over hundreds of projects, ZKB’s portfolio has covered the entire spectrum of construction work in every corner of Pakistan. ZKB is registered as a Partnership firm and owned by 4 Partners. Mr. Zahir Khan, the key founder and CEO of ZKB, with deep hands-on knowledge, has extensive construction industry experience of over 36 years owns 51%, Mr. Mohabbat Khan owns 41%, Mr. Suleman and Mr. Samiullah hold 4%each respectively.

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.