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The Pakistan Credit Rating Agency Limited

Date
18-Dec-2017
Analyst
Mahina Majid
mahina.majid@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Correlation between long-term and short-term rating scale (Jun 17) [View]
  • Methodology | Bank Rating (Jun 17) [View]

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PACRA Maintains Entity Ratings of PAIR Investment Company Limited
 Rating Type Entity
Current
(18-Dec-2017)
Previous
(22-Jun-2017)
 Action Maintain Maintain
 Long Term AA AA
 Short Term A1+ A1+
 Outlook Stable Stable
 Rating Watch - -

The ratings assigned to PAIR take into account its shareholders’ profile, with two sovereigns, Pakistan and Iran, having an equal stake in the company with shares held through Ministry of Finance and Iran Foreign Investment Company (IFIC), respectively. PAIR has been able to sustain its lending portfolio, both in volumes and quality. Management has created an adequate mix of sectors in advances, though client concentration remains high. The capital and treasury division actively manages a portfolio of investments comprising Government securities, Equities, Sukuk & TFCs and funds. During the year, investment book has been consolidated; however, still provides comfortable cushion to the liquidity. Borrowing from financial institution remains the primary source of funding, while management’s attention is required for enhancing the deposit base. Liquidity position and capitalization indicators remained stable. Going forward, PAIR is focusing on strengthening the credit processes while tapping new customers. Management is Cognizant of the fact that JVFIs need to find new niche for growth and development, hence new avenues are being explored including strategic opportunities. Strengthening the non-funded revenue remains in core focus.

The ratings are dependent on the company’s ability to sustain its financial profile while managing the associated risks as advances increase. The concentration level in funding and advances needs to be pro-actively managed. Consistent efforts by the management to add further diversity as well as sustainability to PAIR’s operations would remain critical.
About the Entity
PAIR Investment Comp any Limited is in operations since May 2007. It is an equally owned joint venture of the Government of Islamic Republic of Pakistan through Ministry of Finance (MoF) and the Islamic Republic of Iran through Iran Foreign Investment Company (IFIC). The objective of the Company is to make investment in industrial, agriculture, agro industrial and financial fields in Islamic Republic of Pakistan and lslamic Republic of Iran on commercial basis through carrying out of industrial and agro based projects and marketing of their products in Pakistan and abroad.

Both the partners have equal representation on the six-member Board. Between the two key positions of Chairman and CEO, each partner nominates one, alternative positions for each term of three years. Mr. Hamid Eftekhari Kondelaji, has been appointed as CEO by IFIC in May’17. Chairman position is yet to be filled by MoF, while Mr. Zahoor Ahmed is currently serving as acting chairman. Since the inception of PAIR, this is first time that a representative of IFIC is holding the position of CEO. This should enable better inroads in Iran for PAIR. PAIR has a team of qualified and experienced individuals.
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.
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