The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains Entity Ratings of Orient Rental Modaraba

Rating Type Entity
(31-Oct-22 )
(04-Nov-21 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Orient Rental Modaraba (ORM or the Modaraba) is a multi-purpose perpetual Modaraba, having focal operations in two segments; Ijarah Rental (Genset Rental) and Operations & Maintenance (O&M) agreements. The Modaraba enjoys patronage from its sponsors (ASJN Group), with additional benefits gained through its complementary business nature. The presence of key Group Management Personnel in the Modaraba boosted ORM’s operational efficiency, consequently, enduring economic instability caused by the political instability. The economy gained momentum in the aftermath, in turn, translating into a performance boost for the Modaraba. Ijarah rentals remained the dominant revenue source, capturing a major share in the textile sector. Additionally, stable returns generated from O&M arrangements placed further comfort on the top line. The rating takes comfort from the experienced management and stable performance of the Modaraba. There are plans to further augment the O&M revenue stream as the demand mix tilts towards the latter. The Modaraba has been profitable on account of the high utilization of the rental fleet, due to the increasing demand for power generation equipment offered. The financial strength of the company remains adequate. The Modaraba intends to keep leveraging in the manageable and optimal range of debt-to-equity ratio with minimal reliance on Diminishing Musharakah Financing. Going forward, the Modaraba intends to maintain optimal capacity utilization and further augment its control and governance environment.
The ratings are dependent on the relative positioning of the Modaraba in the sector and sustained asset quality: sustaining bottom-line profitability is important. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.

About the Entity
The Modaraba commenced its operations with effect from Nov 24, 2017, and is engaged in providing equipment rental solutions, operations and maintenance services. The registered office is situated in Karachi, while also maintaining a sub-office in Lahore. The Chairman, Mr. Chaudhry Jawaid Iqbal is an Associate Member of the Institute of the Motor Industry, U.K. and has an extensive experience of more than 30 years working with engineering and power sector companies. In 1996, he along with four partners established Orient Energy Systems (OES) with a long-term objective and vision to be a market leader among power sector companies. Prior to inceptions of OES, he was associated with multiple ventures of high repute local and abroad. The overall control of the Modaraba vests in the six-member Board of Directors (BoD) including the CEO. Except for the CEO, all board members are non-executive including two independent directors.

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.