Press Release

JCR-VIS assigns initial Entity Ratings of A-/A-2 to Allied Rental Modaraba with a Stable Outlook

Karachi, May 18, 2010: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Allied Rental Modaraba (ARM). Outlook on the rating is ‘Stable’.

Allied Rental Modaraba (ARM) is managed by Allied Engineering Management Company (Private) Limited, which is in-turn a wholly owned subsidiary of Allied Engineering and Service Limited (AESL); sole distributor of Caterpillar Inc. (CAT) products in Pakistan. The modaraba commenced operations in January 2007 and is primarily engaged in providing CAT products on rental basis together with offering operation and maintenance services on CAT equipment to clients. Power generation sets comprise major proportion of ARM’s rental fleet though the modaraba also offers forklifts, industrial engines, earth moving equipment and allied products.

With a net worth of over Rs. 1b and low reliance on debt funding, financial position of ARM has remained sound despite the current turbulent macroeconomic environment, on account of the modaraba’s unique business model. The modaraba has been profitable from the first year of its operations on account of high utilization of rental fleet due to increasing demand for power generation equipment offered because of the deepening energy crisis. In view of the rising energy demand expansion of the generator rental fleet is expected to continue, which may allow the modaraba to maintain momentum of growth in profitability. While current ratio has remained below 1x thus far there has been improvement in this regard; moreover, ARM has been able to comfortably meet its debt repayment and growth needs via continuous stream of inflows on account of operating lease rentals and operation and maintenance revenues.

The Board and senior management of ARM comprises qualified personnel with sound industry experience. Steps have been taken for improvement in controls including implementation of an IT system, expected to be completed shortly. Improvement in governance structure and corporate governance practices along with ability to meet budgeted performance targets will be key rating drivers going forward.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 604) or Ms. Sabeen Saleem (Ext: 510) at (+92-21) 35311861-70 or fax to (+92-21) 35311872-3.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited 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.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.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 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited