PACRA Maintains Entity Ratings of Zahir Khan & Brothers

The ratings reflect the established business profile of Zahir Khan & Brothers (ZKB or the Firm), one of Pakistan’s leading contractors with a long-standing presence in executing large-scale infrastructure projects, both independently and through joint ventures. The Firm is led by Zahir Khan and his family and has an extensive track record of working with international donor agencies, which fund a major portion of its projects. While such funding provides comfort against payment delays, it also entails stringent reporting and performance requirements. The Firm’s recent financial performance shows a marked increase in topline, with revenue rising to PKR 37,570mln in FY25 from PKR 20,851mln in FY24, reflecting an expanding project portfolio. However, the improvement at the operating level did not translate proportionately into the bottom line. FY25 profitability stood at PKR 4,803mln, which includes a revaluation gain of PKR 2,203mln. ZKB’s business model remains working-capital intensive. The Firm has traditionally relied on non-funded bank lines and supplier credit to meet its funding requirements, though it has recently started utilizing short-term borrowings to support liquidity. With an expanding order book, non-funded exposure is expected to increase further. While this risk is partly mitigated by the Firm’s sizeable equity base and substantial investment property portfolio, the evolving funding mix and growing reliance on short-term facilities warrant close monitoring. The Firm is also exploring debt market options to diversify funding sources, which may introduce additional leverage-related considerations. The Firm is actively pursuing geographical diversification across its business operations, with a steady pipeline of bids for new projects aimed at supporting revenue growth, if awarded. However, the Firm’s ability to commence and execute newly awarded projects, particularly large-scale and PPP initiatives, remains a key sensitivity. Delays in project mobilization or weaker-than-expected execution could adversely affect cash flows and strain the financial profile.
Management has initiated steps toward corporatization, including the establishment of ZKB Construction (Private) Limited. While these developments reflect a positive direction, governance and corporate structure remain areas that would benefit from further strengthening to better align with best practices. Along side this Financial metrics need to be upheld as well.

About the Entity
Established in 1970, Zahir Khan & Brothers (ZKB) is a prominent player in Pakistan’s construction sector, undertaking projects across diverse segments of the industry. With a portfolio encompassing hundreds of projects, ZKB has delivered a wide range of construction work across the country. Registered as a partnership firm, ZKB is owned by four partners. The key founder and CEO, Mr. Zahir Khan, holds a 51% stake and brings nearly four decades of extensive experience and in-depth knowledge of the construction industry. Mr. Mohabbat Khan owns 41%, while Mr. Suleman and Mr. Samiullah each hold a 4% share.