MIRA INFORM REPORT

Report Date :

23.01.2013

IDENTIFICATION DETAILS

Name :	DESCON ENGINEERING LIMITED

Registered Office :	Descon Headquarters, 18 K.M., Ferozepur Road, Lahore

Country :	Pakistan

Year of Incorporation :	1977

Com. Reg. No.:	0005998

Legal Form :	Principally engaged in manufacturing, engineering & construction projects

Line of Business :	Non-Listed Public Limited Company

No. of Employees :	2,570

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30^th, 2012

Country Name

Previous Rating

(31.03.2011)

Current Rating

(30.06.2012)

Pakistan

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

PAKISTAN - ECONOMIC OVERVIEW

Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. Agriculture accounts for more than one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan's export earnings, and Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Official unemployment is 6%, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Over the past few years, low growth and high inflation, led by a spurt in food prices, have increased the amount of poverty - the UN Human Development Report estimated poverty in 2011 at almost 50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007 to more than 13% for 2011, before declining to 9.3% at year-end. As a result of political and economic instability, the Pakistani rupee has depreciated more than 40% since 2007. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. Although the economy has stabilized since the crisis, it has failed to recover. Foreign investment has not returned, due to investor concerns related to governance, energy, security, and a slow-down in the global economy. Remittances from overseas workers, averaging about $1 billion a month since March 2011, remain a bright spot for Pakistan. However, after a small current account surplus in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to deficit in the second half of 2011, spurred by higher prices for imported oil and lower prices for exported cotton. Pakistan remains stuck in a low-income, low-growth trap, with growth averaging 2.9% per year from 2008 to 2011. Pakistan must address long standing issues related to government revenues and energy production in order to spur the amount of economic growth that will be necessary to employ its growing population. Other long term challenges include expanding investment in education and healthcare, and reducing dependence on foreign donors.

Source : CIA

Business Name

DESCON ENGINEERING LIMITED

Full Address

Registered Address

Descon Headquarters, 18 K.M., Ferozepur Road, Lahore, Pakistan

Tel #	92 (42) 35805134, 35990034
Fax #	92 (42) 35811135, 35811005

Short Description Of Business

Nature of Business	Principally engaged in manufacturing, engineering & construction projects
Year Established	1977
Registration #	0005998

Branches

Address	Akhavan House, 38-Sir Agha Khan III Road, Lahore, Pakistan
Tel #	92 (42) 36365134, 36363446, 36364019
Fax #	92 (42) 36306705

Address	9th Floor, Business Avenue, 26-A Block-6, P.E.C.H.S, Main Shahrah-e-Faisal, Karachi, Pakistan
Tel #	92 (21) 34544481 - 84 (4 Lines)
Fax #	92 (21) 34544480

Auditors

Horwaith Hussain Chaudhri & Co.

(Chartered Accountants)

Legal Status

Subject Company was established as a Non-Listed Public Limited Company in 1977

Authorised Capital	Rs. 500,000,000/- divided into 50,000,000 shares of Rs. 10/- each
Issued & Paid up Capital	Rs. 402,500,000/- divided into 40,250,000 shares of Rs. 10/- each

Details of Management

Names

Designation

Mr. Shaikh Azhar Ali

Mr. Abdul Razzak Dawood

Mr. Syed Zamanat Abbas

Mr. Taimur Dawood

Mr. Faisal Dawood

Chief Executive

Director

Shareholders

Names

No. of Shares

Mr. Hussain Dawood

Mr. Abdul Razzak Dawood

Mrs. Mariam Dawood

Mrs. Jamila Ghani

Mr. Amin Dawood

Mr. Yunus Dawood

Mr. Arif Dawood

Mr. Abdul Ghaffar Dawood

Mrs. Najma Dawood

Mr. Shaikh Azhar Ali

Mrs. Bilquis Dawood

Mrs. Mehreen Dawood

Mr. Taimur Dawood

Mr. Faisal Dawood

Mr. Syed Zamanat Abbas

5,704

37,479,305

52,555

29,486

75,440

575

1,151,150

231,150

461,150

575

Associates

A. Subsidiary

None

B. Associated Companies

(1) JGC-Descon Limited, Pakistan.

(2) Descon Engineering Qatar L.L.C.

(3) Presson Descon International Ltd, Pakistan.

(4) Tawoos Descon Engineering L.L.C, Oman.

(5) Olayan Descon Industrial Co. Ltd, Saudi Arabia.

(6) Descon Chemicals (Pvt.) Ltd, Pakistan.

(7) Descon Information Systems (Pvt.) Ltd, Pakistan.

(8) Descon Holdings (Pvt) Limited, Pakistan.

(9) Lahore Manufacturing Works, Pakistan.

(10) Karachi Manufacturing Works, Pakistan.

(11) Hamriyah Manufacturing Works, U.A.E.

(12) Descon Oxychem Limited, Pakistan.

Products

Principally engaged in manufacturing, engineering & construction projects

Number of Employees

2,570

Annual Sales Volume

Year	In Pak Rupees
2011	20,000,000,000/- (Estimated)

Trade Suppliers (Foreign)

Mainly from European Countries, U.S.A., Japan, Korea, Taiwan, China, Canada & Australia

Customers

Mainly Oil & Gas Exploration Companies, Engineering Companies, Petrochemical Companies, Fertilizer Companies & Cement Companies

Bankers

(1) Citibank, N.A., Pakistan.

(2) Habib Bank Limited, Pakistan.

(3) KASB Bank Limited, Pakistan.

(4) Habib Metropolitan Bank Limited, Pakistan.

(5) MCB Bank Limited, Pakistan.

(6) National Bank of Pakistan.

(7) Standard Chartered Bank, Pakistan.

(8) United Bank Limited, Pakistan.

(9) Soneri Bank Limited, Pakistan.

Memberships

· Lahore Chamber of Commerce & Industry.(LCCI)

· Pakistan Engineering Council.(PEC)

Foreign Exchange Rates

Currency	Unit	Pakistani Rupee
US Dollar	1	Rs. 98.70
UK Pound	1	Rs. 156.00
Euro	1	Rs. 130.60

Comments

Subject is a well-established company having satisfactory track. Directors are reported as qualified, experienced and resourceful businessmen. Trade relations are reported as fair. Payments are usually correct and as per commitments. Subject can be considered for normal business dealings at usual trade terms and conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.53.51
UK Pound	1	Rs.84.85
Euro	1	Rs.71.43

INFORMATION DETAILS

Report Prepared by :

PRL

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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