Lahore, January 10, 2018 (PPI-OT):The ratings reflect Etimaad’s adequate business profile appended by slightly improved profits. Over the years, the sponsors established similar businesses mainly in Saudi Arabia (subsidiary) and Qatar (associate). Considering worsening market conditions due to geopolitical tensions in the region and the turmoil in oil prices, Etimaad decided to divest its shares and continued its focus in Pakistan. Etimaad has completed various projects in Pakistan and overseas. Etimaad has a reasonable universe of contracts on its plate, wherein margins are adequate.

The performance of the company resonates with contracts in hand. The business strategy envisages enhanced focus on EPC in power sector; bagasse based power plants that reflect in its upcoming projects. The financial profile is adequately leveraged. The Company has stressed business profile due to limited free cash flows and Etimaad’s need to avail bank guarantees for awarded projects. Herein, financial support of sponsors is key essential. The sponsors demonstrated their commitment by operationally supporting the business and providing, i) fresh capital whenever the need arose, and ii) security and personal guarantees to obtain financial facilities and guarantees.

In the recent past, the management has undertaken several initiatives to streamline its business. Company is revamping of overall business model in line with market dynamics with a strategic focus on subcontracting. The management is confident that the financial profile will gradually gain strength through organic growth. At the same time, the management remains focused to settle disputes and recover receivables to minimize deficit in projects where the company had incurred losses. The success of the management’s initiatives is critical for Prosperity of the company. Meanwhile, strengthening of governance structure is important which can be achieved by induction of non-executive member(s) on the Board.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com