Press Release

JCR-VIS reaffirms ratings of First Paramount Modaraba
 

Karachi, July 27, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of First Paramount Modaraba (FPM) at ‘BBB-/A-3’ (Triple B Minus/A-Three).

FPM caters to the SME segment, which has been significantly affected by the recent economic downturn leading to increased stress on portfolio quality indicators. However, the modaraba has been able to maintain its overall risk profile amidst the economic and financial recession on account of its conservative capital structure.

Morabaha financing activity and CNG operations have remained the primary revenue sources. The modaraba has recently completed Shariah audit of morabaha financing activity in an effort to improve level of corporate governance and access to funds. In view of the increased risk in the CNG sector due to declining natural gas reserves and increasing competition, FPM has taken steps to divest its CNG operations and diversify into other areas like trading and rental of generators. While profitability of generator business has remained low thus far on account of limited scale of operations, there is significant room for improvement on account of continuing energy demand and supply gap.

The modaraba is making efforts to diversify its funding sources and reduce reliance on borrowings from commercial banks through issuance of COMs. This is also expected to result in reduced cost of borrowing allowing FPM to cater to corporate segment, where financing yield is low in line with healthier risk profile. Development of a COM module is currently in progress. Outlook on the rating has remained ‘Positive’ on account of steps for improvement in risk profile of the modaraba.

For further information on this rating announcement, please contact the undersigned (Ext: 508) or Mr. Zia Usmani (Ext: 507) at 021-35311861-70 or fax to 021-35311872-3.


Syed Ziauddin Ahmed
Advisor

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2010 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited