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The Pakistan Credit Rating Agency Limited

Date
10-Jan-2018
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Muhammad Obaid
muhammad.obaid@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Corporate Rating Methodology (Jul 17)
  • Correlation between long-term and short-term rating scale (Jun 17)
  • Criteria Modifiers (Jun 17)

Related Research

  • Sector Study | Engineering Procurement and Construction (Jun 17)
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PACRA assigns Entity Ratings to M.A. Aleem Khan and Sons (Pvt) Limited (MAAKSONS)
 Rating Type Entity
Current
(10-Jan-2018)
 Action Initial
 Long Term BBB+
 Short Term A2
 Outlook Stable
 Rating Watch -

M. A. Aleem Khan & Sons (Pvt) Limited (MAAKSONS) has been in the construction industry for many decades. The company has three generations of the sponsoring family in the business and has two main offices – Lahore and Islamabad. The sponsors have a very good understanding of the business. The reporting and functional responsibilities are clearly demarcated. The company has delivered multiple, Army and DHA, projects. MAAKSONS has a no limit contract license. The company’s profitability and leveraging is adequate, and has a mix of funded and non-funded banking lines to facilitate its business. Construction business is dependent on award of public works (Federal & Provincial PSDP + CPEC). The control environment may be strengthened by harnessing the audit quality and adopting quarterly accounts. 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, implying reliance only on short term working capital excluding long term debt.
The ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can negatively affect the rating. Good corporate governance practice is considered essential.
About the Entity
MAAKSONS officially registered as a Company in 1984 but has been in business since 1951. MAAKSONS scope of work comprises construction of roads and highways, bridges and structures, residential and commercial buildings, canals and tunnels, etc. Significant projects to its credit are Signal Free Corridor Islamabad Highway, Metro Lahore, 29 storey Telecom Tower Islamabad, Gulberg Green, 3x210 Thermal Power Station Muzaffargarh, Chashma Canal, etc. to name a few. It is currently focused on a few major projects in Lahore including, a multipurpose complex - Panta Square, a housing society - Prism 9, and a Signal Free Corridor in DHA.
BOD comprises nine members, all of whom belong to the sponsoring family. They collectively have complete ownership of the company.
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.