The Pakistan Credit Rating Agency Limited
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Adnan Dilawar

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PACRA Maintains Entity Ratings of Fazal Holdings (Pvt.) Limited

Rating Type Entity
(28-May-19 )
(26-Nov-18 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Fazal Holdings (Pvt.) Limited ('Fazal Holdings') is a holding company for Fazal Group. It's investment portfolio comprises a combination of strategic investments (long-term investments in subsidiaries and associates) and trading portfolio (with short to medium - term time horizon). As per policy, active trading is minimal. Trading portfolio comprises a combination of blue chip companies, spread across diverse sectors of the economy. Fazal Holdings drives its revenue from dividend income (mainly from strategic investments) and capital gains. The dividend stream were impacted due to recent downturn in capital markets. Sponsors intend to expand Fazal Holdings. Consequently, profits are being retained and any surplus funds, elsewhere in the Group, are also routed through Fazal Holdings. The Company has designed a conservative investment policy accordance with the Company's equity. This should help absorb the effects of volatility in stock market on assets of Fazal Holdings and keep financial risk manageable. Investment decisions are mainly led by Mr. Rehman Naseem with assistance from resources within Fazal Group and certain research/brokerage houses. Herein, institutionalization of investment policies would be beneficial.
Ratings are dependent on management's initiative to strengthen investment making and performance monitoring mechanism of underlying investments. This would facilitate Fazal Holdings assimilation into an effective holding company. Prolonged downturn in the capital market and/or material performance weakening of investee companies would have a negative impact on the ratings. At the same time, adhering to agreed financial matrix and keeping debt coverages at adequate level remains critical.

About the Entity
Fazal Holdings is a private limited company and is engaged in the trading of listed and un-listed securities. The Company was established in April, 1995 with the name of Amir Fine Exports (Private) Limited and was engaged in the trading of yarn, cloth and securities. In 2016, the Company’s name was changed to Fazal Holdings (Pvt.) Limited and it's operations were limited to investing and trading in quoted and unquoted securities.

Mr. Rehman Naseem holds 49% of the shareholding followed by Mr. Yousaf Amir and Mr. Abdullah Amir (Sons of Mr. Amir Naseem) holding 22% each. Remaining 7% shareholding is held by other members of Fazal Family.

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.