The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA Maintains Entity Ratings of ORIX Modaraba

Rating Type Entity
(04-Mar-21 )
(04-Mar-20 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

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. ORIX Modaraba (ORIXM) enjoys a sound financial profile emanating from leveraging, managed liquidity, and sustained profitability. The Modaraba’s operation with Orix Leasing provides synergistic impetus. Benefit is also derived in the form of strengthening with respect to risk management, providing established outreach and experience. The robust risk management systems and control environment provide strength to the Modaraba's profile.
The management's business strategy envisages growth in its assets financings, this was hampered by COVID-19 during the past year. While ramifications of this menace are still unfolding, the economic wheel has started rolling. This has been positively cushioned by steps taken by the regulatory and governing bodies including reduction in the interest rates.
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 ratings are dependent on the ORIXM's ability to develop and sustain its 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.

About the Entity
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-Dec20.
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 29 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.