Wajahat Arjumand Ansari
PACRA Maintains Entity Ratings of Modaraba Al Mali
Modaraba Al Mali (“MAM” or “the Modaraba”), owned and managed by AssetPlex Limited (formerly known as Bank Islami Investments Limited), has been operating as a small player in the Modaraba Industry. Up in the course of acquisition, the developments at sponsorship level have borne fruit, as new sponsors of MAM have emerged as a key resource, possessing good industrial and financial acumen. The new sponsorship and management have provided fresh and strategic redirection to the operations of the Modaraba through planned cessation of existing business lines (Islamic Finance) and launching IPO Support Fund, Underwriting & Business Revival Activities and Strategic Investments. Developments in the business plan had been long outstanding and its provision bodes as a positive omen for operational development of the Modaraba. An initiative towards the proposed business plan is in progress, with the merger of MAM with LSE Financial Services being under consideration. The envisioned strategic plans of the sponsors are to gauge prospects of the business. However, conversion of potential business projects into cash generating units remain yet to unfold.
In view of the operational developments, the Modaraba continues to generate a nominal topline channeled through its depleting Islamic financing products and fuel station. New revenue lines are expected to emerge in view of the proposed business plans. Improvement in the financial performance remains crucial for operational sustainability. The rating takes comfort from the equity-based capital structure maintained by the Modaraba, indicating a low financial risk profile. Improvement in the equity profile has been observed through the period as a rights issue further supplemented the Modaraba’s financial profile, however, further equity is necessary in order to materialize the proposed business lines.
The ratings of the Modaraba continues to base upon the sustainability of its risk profile. Sponsor support and management performance, actualized through establishment of profit generating business lines remain crucial for the ratings. Any change in the funding mix may have a potentially adverse impact on the financial profile of MAM.
Modaraba Al Mali (MAM) was incorporated in 1987 as a perpetual multi-purpose modaraba. MAM is listed on the Pakistan Stock Exchange and has its Head Office located in Lahore. AssetPlex Limited is the parent company of Modaraba Al Mali, holding an ownership stake of ~33%, whereas the remaining ownership is distributed between NBFCs, joint stock companies and individuals.
The board composition has been restructured, with the board incorporating a good mix of non – executive, independent and executive members, with a total of seven members being present on the board. Mr. Abdul Qadir Memon holds the title of Board Chairman. He is a reputed banking veteran, gracing experience of over 35 years. The leadership of MAM has been taken over by Mr. Aftab Ahmed Chaudhary as its Chief Executive Officer. Mr. Aftab has formerly served as the managing director of Islamabad Stock Exchange and Lahore Stock Exchange. He is supported by Mr. Rashid Matin Khan as the Chief Financial Officer and Company Secretary.