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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Feb-19

Analyst
Muhammad Abdullah
muhammad.abdullah@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of ORIX Modaraba

Rating Type Entity
Current
(26-Feb-19)
Previous
(05-Nov-18)
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

ORIX Modaraba (ORIXM) enjoys sound financial profile emanating from leveraging, managed liquidity, and sustained profitability. Moreover, good management quality, strong risk management systems and control environment provide strength to ORIXM's profile. The management's business strategy envisages volumetric growth in assets to improve its performance trends. With this, the dip in profitability is planned to be recovered. The expected growth would be funded through mix of internal sources and debt. However, the management expects to maintain the leveraging pattern at a 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. Deterioration in respective business size and consequent margins, leading to erosion of profitability, and/or coverages will have negative impact on the ratings. Increase of financial stake from parent company will remain critical for the ratings going forward.

About the Entity
ORIX Modaraba, is a perpetual, multipurpose Modaraba, listed on the Pakistan Stock Exchange. ORIX Leasing Pakistan Limited (OLP) has 100% stake in Modaraba’s management company - 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 investment finance company of Pakistan and has a network of 38 branches across the country at end-Dec18.

ORIX Modaraba's Board of Directors (BoD) comprises six members including the Chief Executive Officer. 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.