Press Release

VIS Assigns Initial Ratings to Sachal Engineering Works (Pvt.) Limited

Karachi, August 23, 2023: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Sachal Engineering Works (Pvt.) Limited (SEWL). The medium to long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in economy. Short term rating of ‘A-2’ indicates good certainty of timely payment supported by sound liquidity and company fundamentals. Access to capital market is good and risk factors are small. Outlook on the assigned ratings is ‘Stable’.

SEWL operates in infrastructure development sector, primarily involving expansion, planning, designing, implementation, construction and execution of roads, bridges and related projects. In an infrastructure starved country, the business risk profile of the Company is considered low given the China-Pakistan Economic Corridor (CPEC) and non-CPEC projects, which would entail substantial outlay from internal (mostly Govt. and Public Private Partnership (PPP) schemes) and external sources (multilateral and bilateral) over a significant time in future. The diversification of the Company by way of investments in Toll Roads and Hydro Power projects while mitigating the business risk, also provides financial strength to the Company.

In FY22 and FY23, more than two-third of the revenues emanated from Ghotki Kandhkot Road and Bridge project over Indus River, which is expected to be completed in July’27. As major cost components are indexed to inflationary adjustments in such projects, gross margins have remained healthy and depicted a range-bound variation over the years. The liquidity position of the Company is underpinned by adequate cash flow coverages and working capital management. In addition, the responsibility of financing arrangements in PPP projects lies with the respective Govt. entity, ensuring adequate and timely availability of funds, including coverage for cost overruns as well. The leverage indicators have remained at quite comfortable level on a timeline basis, reflecting strong risk absorption capacity. Meanwhile, the ratings will remain dependent on upholding financial metrics involving timely completion of key commercial projects. Moreover, effective management of business risks related to inherent uncertainty in the bidding process and timely receivables collection to avoid cash flows mismatch are considered critical form rating perspective.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8001) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)

VIS Rating scale

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .