Draft PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Saliha Sajid

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16)
  • Correlation between Long-term and Short-term rating (Jun 16)
  • Methodology | Non-Banking Finance Companies (Jan 17)

Related Research

  • Sector Study | Modaraba & NBFCs (Mar 17)
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PACRA Maintains Entity Ratings of Modaraba Al-Mali
 Rating Type Entity
 Action Maintain
 Long Term A-
 Short Term A2
 Outlook Stable
 Rating Watch -

The ratings reflect adequate financial profile of Modaraba Al Mali supported by its equity based capital structure. Modaraba is gradually building up its financing book, deploying funds in Iajarah and Musharaka. Ijarah book is slightly decreased; MAM's non-additive and fully provided non-performing book depicts management's cautious strategy. Gasoline station is adding value into the non-financing side of Modaraba. The management would maintain largely equity based capital structure; however borrowing from the management company and sponsor bank would be available.

The ratings are dependent on the management's ability to focus more on its core business, adding more Musharakah financing and ensure consistent improvement in its performance. Maintaining healthy asset quality while maintaining it’s current largely equity based capital structure is important to maintain the ratings at current level.
About the Entity
Modaraba Al-Mali (MAM), incorporated in 1987, is a small sized and perpetual multi-purpose Modaraba listed on Pakistan Stock Exchange, with its head office in Karachi. BankIslami Modaraba Investments Limited (BIML) – wholly owned subsidiary of BankIslami Pakistan Limited (BIPL) owns 13% equity of MAM, whereas others certificates are distributed among NBFCs, joint stock companies and individuals. BoD comprises eight members. Seven nominees are of BIPL and among them, there is one independent director. Mr. Aziz Adil- CEO of Modaraba Al Mali has two decades of diversified experience in the field of Islamic Finance. He is supported by a qualified management team.
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.