The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Noor Ul Haq

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of OLP Modaraba

Rating Type Entity
(03-Mar-23 )
(03-Mar-22 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings of the Modaraba take fundamental support from its association with OLP Financial Services. The Modaraba’s prompt decision-making framework, together with its efficient management systems, is reflected in the entity’s ratings. PACRA believes there is a high strategic linkage between OLP Modaraba and its Parent Company, and Modaraba’s operation with OLP Financial Services entails synergistic inputs for the entity. A trend of positive financial strategies, causing healthy fund balances and adequate liquidity levels contributed to the maintenance of the ratings. The aforementioned factors also led to the perpetuation of a stable outlook for the Modaraba. In addition, OLP Modaraba profits from its diverse product portfolio, as it can target a significant portion of the customer market. However, the current operating environment poses high business risk as the sales & production of OEMs depicted a significant decrease during the 7MFY23 coupled with a drastic spike in interest rates. This would negatively impact the business performance of modaraba industry going forward. The Company is committed to expanding its portfolio with extreme caution and adopting prudent portfolio management by maintaining its respective risk.
The ratings are dependent on the OLP Modaraba's ability to develop and sustain its business profile while ensuring stable profitability and financial metrics. Deterioration in respective business size and consequent margins, leading to erosion of profitability, and/or coverages will have a negative impact on the ratings.

About the Entity
OLP Modaraba is a perpetual, multipurpose Modaraba listed on the Pakistan Stock Exchange with a 75% free float. Overall, OLP Financial Services possesses a 20% stake in the Modaraba, out of which 10% is via direct ownership while the remaining is through its subsidiary, OLP Services Pakistan (Private) Limited. OLP Services is the management company of OLP Modaraba. The Parent Company of the Modaraba, OLP – 49.6% owned subsidiary of Orix Corporation, Japan (A- rated by Fitch). OLP Modaraba’s Board of Directors comprises seven members, including the Chief Executive Officer (CEO). The Chief Executive Officer - Mr. Raheel Q. Ahmad - an MBA from MIT, Chicago, has over 30 years of diversified corporate and investment banking experience with both national and international organizations. He is supported by a team of professionals with relevant experience in the financial industry.

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.