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The Pakistan Credit Rating Agency Limited

Date
12-Feb-2018
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]
  • Methodology | Correlation between long-term and short-term rating scale (Jun 17) [View]
  • Methodology | Criteria Modifiers (Jun 17) [View]

Related Research

  • Sector Study | Modaraba & NBFCs (Mar 17) [View]
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PACRA Maintains Entity Ratings of ORIX Leasing Pakistan Limited
 Rating Type Entity
Current
(12-Feb-2018)
Previous
(23-Jun-2017)
 Action. Maintain Maintain
 Long Term AA+ AA+
 Short Term A1+ A1+
 Outlook Stable Stable
 Rating Watch - -

The rating reflects OLP's augmented market position and continuous support by ORIX (Japan). The Company's operations are supported by quality risk management framework and strong internal controls. The management, while exploring various options to garner future growth, continues to emphasize on improved spreads, increased geographical outreach and diversification into different businesses by utilizing the capital available to the Company by offloading under-performing investments. OLP earning assets book was largely maintained during FY17. Company maintains a fairly healthy funding structure, main source of funding remains bank borrowing and CoDs. OLP’s capital structure benefited by the issuance of right shares during 1QFY18. The paradigm change would emerge as OLP will expand its operational horizon with a new license as Investment Finance Company.
The ratings are dependent on the Company's ability to maintain its market position while generating sound profitability. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.
About the Entity
ORIX Leasing Pakistan Limited (OLP) commenced commercial operations in 1986. OLP has a network of 36 branches spread across 33 cities. OLP is listed on Pakistan Stock Exchange (PSX). OLP is majority owned by ORIX Corporation (49.6%) and State Life Insurance Corporation (SLIC) (5.25%). Arif Habib Limited has obtained 8.7% stake in the Company, while the rest is distributed among other corporates and general public. In FY17, OLP maintained its market share in leasing industry in terms of total assets at 80%.

ORIX Corporation, established in 1964 is a major conglomerate with presence all over the world. Starting with leasing, ORIX presently has interests in many sectors including Asset management, Automobile, Insurance and Energy to name a few.

The Board of Directors (BoD) comprises of nine members, including the Chief Executive Officer (CEO). It constitutes four nominees of ORIX and four independent directors and the CEO. Apart from CEO all are non-executive directors. During 2016 Mr. Khalid Aziz Mirza, ex-Chairman SECP, joined the board as Chairman. Mr. Shaheen Amin, CEO, has been associated with the ORIX group since 1986. Mr. Arshad Abbas was appointed as Deputy CEO in May-17. OLP has a well-defined organizational structure and with clear job responsibilities, fourteen experienced professionals are heading key functions.
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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