The Pakistan Credit Rating Agency Limited
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Sami Kamran Chaudhry

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PACRA Maintains Entity Ratings of First Fidelity Leasing Modaraba

Rating Type Entity
Action Maintain Maintain
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings reflect adequate financial profile of First Fidelity Leasing Modaraba (FFLM) supported by its debt free structure. However, subsequent benefits have been limited as significant portion of the asset structure is invested in non-earning/illiquid assets i.e. investment property – Enplan (Private) Limited. The Modaraba has posted a marginally improved YoY performance for period ending March 2021. FFLM has an earning book mainly deployed in a portfolio of machinery and vehicles. Meanwhile, the management is making continuous and rigorous efforts to liquidate its exposure in "Enplan"; and they expect an amicable resolution. Concerns regarding another illiquid investment property - Murree Villas, are further expected to be resolved. The Modaraba is yet to develop a sustainable business model although the debt-free structure provides comfort to the rating. Governance structure needs to be enhanced while the core business base needs to be enhanced going forward.
The ratings are dependent on the management's ability to envisage a business plan for the Modaraba. Timely liquidation of investment in "Enplan" is important to bring viability to the Modaraba. The management is making continuous efforts. Meanwhile, any debt acquisition should be considered carefully.

About the Entity
First Fidelity Leasing Modaraba (FFLM) is a perpetual, multipurpose Modaraba founded in 1991, engaged in Islamic mode of leasing and term financing under morabaha. Additionally, the Modaraba has developed a portfolio of investment properties, both land and building. Modaraba’ s assets also include membership of Pakistan Mercantile Exchange Limited (PMEX).
Fidelity Capital Management (Private) Limited (FCML) is the management company of the Modaraba. FCML is majority owned by Mughals Imperial (Pvt.) Ltd and two individuals (60%), whereas Chief Executive Officer of the Modaraba Mr. Wasim-ul-Haq Osmani (18%) and his associates (22%) owned the remainder of shares. FCML has 24% stake in the Modaraba (FFLM) while 66% is owned by general public.

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.