Muhammad Noor Ul Haq
PACRA Maintains Entity Ratings of ORIX Modaraba
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, albeit a bit slow due to the ongoing strained economic environment and rising interest rate scenario, 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.
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 over 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.