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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Nov-21

Analyst
Wajahat Arjumand Ansari
wajahat.ansari@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Orient Rental Modaraba

Rating Type Entity
Current
(04-Nov-21 )
Previous
(04-Nov-20 )
Action Maintain Initial
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Orient Rental Modaraba (ORM or the Modaraba) is a multi-purpose perpetual Modaraba, having focal operations in two segments; Ijarah Rental (Genset Rental) and Operations & Maintenance (O&M) agreements. The Modaraba enjoys patronage from its sponsors (ASJN Group), with additional benefits gained through its complementary business nature. The presence of key Group Management personnel in the Modaraba boosted ORM’s operational efficiency, consequently, enduring economic instability caused by COVID-19 pandemic. The economy gained momentum in the aftermath, in turn, translating into a performance boost for the Modaraba. Ijarah rentals remained the dominant revenue source, capturing major share in the textile sector. Additionally, stable returns generated from O&M arrangements placed further comfort to the topline. The rating takes comfort from the experienced management and stable performance of the Modaraba. There are plans to further augment O&M revenue stream as the demand mix tilts towards the latter. The Modaraba has been profitable on account of high utilization of rental fleet, due to increasing demand for power generation equipment offered. Financial strength of the company remains adequate. The Modaraba intends to keep leveraging in the manageable range, not more than debt equity of 40:60, with minimal reliance on COMs. Going forward, the Modaraba intends to maintain optimal capacity utilization and further augments its control and governance environment.
The ratings are dependent on relative positioning of the Modaraba in the sector and sustained asset quality: sustaining bottom line profitability is important. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.

About the Entity
The Modaraba commenced its operations with effect from Nov 24, 2017 and is engaged in providing equipment rental solutions, operation and maintenance services. The registered office is situated in Karachi, while also maintaining a sub-office at Lahore.
The Chairman, Mr. Mohammad Saeed, is a Bachelor of Electrical Engineering from Mehran University of Engineering & Technology, Pakistan having more than three decades of professional experience with engineering and power sector companies. The overall control of the Modaraba vests in the seven-member Board of Directors (BoD) including the CEO. Except the CEO, all board members are non-executive including two independent directors.

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.