The Pakistan Credit Rating Agency Limited
07-May-18
Analyst
Shahzad Saleem
shahzad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Rating Methodology | Jul-17
- Methodology | Correlation between long-term and short-term rating scale | Jun-17
- Methodology | Criteria Modifiers | Jun-17
- Methodology | Holding Companies | Jun-17
Related Research
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PACRA Maintains Entity Ratings of Fazal Holdings (Pvt) Limited
| Rating Type | Entity | |
|
Current (07-May-18 ) |
Previous (31-Aug-17 ) |
|
| Action | Maintain | Initial |
| Long Term | A | A |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Fazal Holdings (Pvt.) Limited ('Fazal Holdings') is an investment holding company for Fazal group. Its investment portfolio comprises a combination of strategic investments ( long-term investments in subsidiaries and associates) and trading investments (with short to medium - term time horizon). As per policy, active trading is minimal. The portfolio comprises a combination of established and developing companies. Fazal Holdings investments spread across diverse sectors of economy. The ensuing dividend stream from the investments supplements Fazal Holdings revenues, which also emanate from capital gains. Sponsors intend to expand Fazal Holdings. Consequently, profits are being retained and any surplus funds, elsewhere in the group, are also routed to Fazal Holdings. The company has designed a conservative leverage policy according to the size of investment book. This should help absorb the effects of volatility in stock market on assets of Fazal Holdings and keep financial risk manageable. Investment decisions are led by Mr. Rehman Naseem. He gets assistance from resources within Fazal group and certain research/brokerage houses. Herein, institutionalization would be beneficial.
The rating is dependent on management's initiatives to strengthen mechanism for monitoring performance of underlying investments. This would facilitate Fazal Holdings assimilation into an effective holding company. Any unforeseen downturn in the capital market and/or material performance weakening at investee companies adversely impacting the company's risk absorption capacity would have negative implications for the ratings. At the same time, adhering to agreed financial matrix and keeping debt coverages at adequate level is critical.
About
the Entity
Fazal Holdings is a private limited company and is engaged in the trading of listed and un-listed securities. The Company was established in April, 1995 with the name of Amir Fine Export (Private) Limited. The company was engaged in the trading of yarn, cloth and securities. In 2016, the company’s name was changed to Fazal Holdings (Pvt.) Limited and it's operations were limited investing and trading in quoted and unquoted securities.