PACRA Maintains Entity Ratings of First Fidelity Leasing Modaraba

Lahore, June 29, 2018 (PPI-OT):The ratings reflect adequate financial profile of FFLM supported by its Debt free structure. However, subsequent benefits have been limited due to deteriorated asset structure. FFLM’s financing book is deteriorating due to non-availability of funds. FFLM’s significant portion invested in non-earning/ illiquid assets mainly less liquid investment property – Enplan – and Murree villas. Also, sizeable net non-performing advances although majority of them are covered.

This exhibits weak earning profile and limited resources available to the Modaraba. Although Modaraba booked a gain by selling its PSX room. Meanwhile, the management is making continuous and rigorous efforts to liquidate its exposure in “Enplan”. Persistent delays constrained the performance and growth of the Modaraba. Also management has made some recoveries in NPL during 9MFY18.

The ratings are dependent on the management’s ability to envisage a business plan for the Modaraba. Timely liquidation of investment in “Enplan” and “Murree Villas”is important to bring viability to the Modaraba. The management is making continuous efforts. Any significant decline in its value, resulting in erosion in equity, would have negative implications for the ratings. Meanwhile, any debt acquisition should be considered carefully.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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