PACRA Maintains Entity Ratings of Pak-Libya Holding Company (Pvt.) Limited
Development Financial institutions (DFIs) largely operate on turf common to commercial banks. Ratings reflect improved performance of the company; core margins have seen significant improvement, as core profits were reported (1QCY20: PKR 69mln). Alternative income streams were built, like trading in Govt. securities, specifically investing in PIBs; enhanced tactical allocation in accordance with current market conditions being manage well though exposure to market risk needs to be consistently monitored. Management intends to refine the existing investment policy. Resultantly, company booked capital gain compared to capital losses which has supplemented the profits in latest quarter. Recoveries, resulted from settlement of NPLs, were leading to reversal in provisioning also helped profits. Funding base majorly comprises borrowings from money market while minuscule portion lies in CoIs. Notably, Covid-19 has posed challenges to all segments of the economy, worldwide and domestically, most sectors are getting negatively impacted. The ramifications would continue to unfold, warranting vigilance and timely actions where needed.
Rigorous efforts were made to enhance employee efficiency. Another critical milestone achieved regarding Kamoke Energy Limited (KEL), largest non-return generating asset, wherein management is all set in making it a performing asset via an engagement with another player in the market. Capital is injected during CY19, MOF injected PKR 200mln whilst another PKR 500mln is credited into PLHC's account during June-20. LAFICO has already injected PKR 1bln as advance for right issue subscription, which was received by PLHC via three credit advices accumulating the total amount. Two right issues are planned in upcoming months after which PLHC will be MCR compliant.
The financial profile, signify the progress to comply with regulatory minimum capital requirement. As per management representation, company has achieved on net equity basis an amount equivalent to MCR; the watch captures the company's resolve to complete the 'right issue' and reach towards compliance with MCR requirement. Consistent efforts by the management to stabilize revenue stream and attain sustained profit stream from diversified operations are underway. Meanwhile, sustaining asset quality is essential for the ratings.
Pak Libya Holding Company (Pvt.) Limited (Pak Libya) was established as a joint stock company in October 1978. The Company is equally owned by the Government of Islamic Republic of Pakistan, represented through State Bank of Pakistan (SBP), and the Government of Libya, represented through Libyan Foreign Investment Company (LAFICO). The overall control vests with six-member board of directors including MD/CEO, DMD and four non-executive directors having equal representation from both governments. Company’s MD/CEO, Mr. Khurram Hussain carries financial sector experience of almost 30 years.