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The Pakistan Credit Rating Agency Limited

Date
02-Aug-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Saliha Sajid
saliha.sajid@pacra.com

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

  • Methodology | Non-Banking Finance Companies (Jan 17) [View]
  • Preference Shares Rating Methodology (Jun 17) [View]
  • Correlation between long-term and short-term rating scale (Jun 17) [View]

Related Research

  • Sector Study | Modaraba & NBFCs (Mar 17) [View]
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PACRA Maintains Entity Ratings of ORIX Modaraba
 Rating Type Entity
Current
(02-Aug-2017-)
Previous
(14-Jan-2017)
 Action Maintain Initial
 Long Term AA AA
 Short Term A1+ A1+
 Outlook Stable Stable
 Rating Watch - -

ORIX Modaraba enjoys sound financial profile emanating from low leveraging, managed liquidity, and sustained profitability. Moreover, good management quality, strong risk management systems and control environment provide strength to ORIXM's profile. The Modaraba maintains its healthy performance - particularly asset quality and profitability. The management's new business strategy envisages volumetric growth in assets to improve its performance trends. The expected growth would be funded through mix of internal sources and debt. However, the management expects to maintain the leveraging pattern at comfortable level. The Modaraba's affiliation with ORIX Leasing Pakistan Limited helps in further strengthening the risk management, providing established outreach and experience of parent, particularly in SME segment, which the management of Modaraba has identified as key growth driver.
The ratings are dependent on the management's ability to sustain its strong financial profile while ensuring stable profitability.

About the Entity
ORIX Modaraba, is a perpetual, multipurpose Modaraba, listed on the Pakistan Stock Exchange. ORIX Modaraba’s acquisition by ORIX Leasing Pakistan Limited (OLP) was completed in FY16, wherein, OLP has acquired 100% stake in Modaraba’ s management company - now called ORIX Services Pakistan Limited (OSPL) - and 20% stake (direct and indirect) in ORIX Modaraba ORIXM). It is primarily engaged in financing of plant, machinery and vehicles. The parent company, OLP - 50% owned subsidiary of ORIX Corporation - Japan and rated "AA+" (Double A Plus) by PACRA is the biggest leasing company of Pakistan and has a network of 30 branches across the country at end-Dec16.

ORIX Modaraba's Board of Directors (BoD) comprises six members including the Chief Executive Officer. Four board members are ex-officio nominees of OLP. Chairman ORIX Modaraba, Shaheen Amin, an experienced professional, who has been associated with OLP for 30 years. The Chief Executive Officer of ORIX Modaraba, Mr. Raheel Q. Ahmad, an MBA from IIT, Chicago, has over 25 years of diversified corporate and investment banking experience with both national and international organizations. He is supported by a team of professionals with relevant experience in the financial industry.
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.
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