The Pakistan Credit Rating Agency Limited
20-Apr-17
Analyst
Muhammad Jhangeer Hanif
jhangeer@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Rating Modifiers | Outlook and Rating Watch | Jun-16
- Correlation between Long-term and Short-term rating | Jun-16
- Methodology | Non-Banking Finance Companies | Jan-17
Related Research
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PACRA Maintains Entity Ratings of Modaraba Al-Mali
| Rating Type | Entity | |
|
Current (20-Apr-17 ) |
Previous (20-Apr-16 ) |
|
| Action | Maintain | Maintain |
| Long Term | A- | A- |
| Short Term | A2 | A2 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect adequate financial profile of Modaraba Al Mali supported by its equity based capital structure. Modaraba is gradually building up its financing book, deploying funds in Iajarah and Musharaka. Ijarah book is slightly decreased; MAM's non-additive and fully provided non-performing book depicts management's cautious strategy. Gasoline station is adding value into the non-financing side of Modaraba. The management would maintain largely equity based capital structure; however borrowing from the management company and sponsor bank would be available.
The ratings are dependent on the management's ability to focus more on its core business, adding more Musharakah financing and ensure consistent improvement in its performance. Maintaining healthy asset quality while maintaining it’s current largely equity based capital structure is important to maintain the ratings at current level.
About
the Entity
Modaraba Al-Mali (MAM), incorporated in 1987, is a small sized and perpetual multi-purpose Modaraba listed on Pakistan Stock Exchange, with its head office in Karachi. BankIslami Modaraba Investments Limited (BIML) – wholly owned subsidiary of BankIslami Pakistan Limited (BIPL) owns 13% equity of MAM, whereas others certificates are distributed among NBFCs, joint stock companies and individuals. BoD comprises eight members. Seven nominees are of BIPL and among them, there is one independent director. Mr. Aziz Adil- CEO of Modaraba Al Mali has two decades of diversified experience in the field of Islamic Finance. He is supported by a qualified management team.