Muhammad Noor Ul Haq
PACRA Maintains Entity Ratings of ORIX Modaraba
ORIX Modaraba (ORIXM) enjoys a sound financial profile emanating from leveraging, managed liquidity, and sustained profitability. The ratings reflect the extensive experience of ORIXM management in the financial services industry, stable assets quality, and adequate capital position necessary to manage the current scale of operations. Moreover, strong risk management systems and control environment provide strength to the Modaraba's profile. The management's business strategy envisages growth in its assets financings, albeit a bit slow due to the ongoing strained economic environment and rising interest rate scenario, to improve its performance trends. The expected growth would be funded through a mix of internal sources and debt. However, the management expects to maintain the leveraging pattern up to a comfortable level. The Modaraba's affiliation with ORIX Leasing Pakistan Limited would assist ORIXM in further strengthening with respect to risk management, providing established outreach and experience, particularly in the SME segment, which the management of ORIXM has identified as a key growth driver.
The ratings are dependent on the ORIXM's ability to develop and sustain its strong business profile while ensuring stable profitability and financial metrics. 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 a 100% stake in ORIXM’s management company - ORIX Services Pakistan (Pvt.) Limited (OSPL) - and 20% stake (direct and indirect) in ORIXM. It is primarily engaged in the financing of plant, machinery, equipment, vehicles and housing finance. 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-Dec19.
ORIXM's Board of Directors (BoD) comprises six members including the Chief Executive Officer. The Chairman, Mr Shaheen Amin, an experienced professional, who has been associated with OLP for over 30 years. The Chief Executive Officer - Mr. Raheel Q. Ahmad, an MBA from IIT, Chicago, has over 27 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.