Press Release

JCR-VIS Upgrades Ratings of Allied Rental Modaraba to A+/A-1

Karachi, July 30, 2013: JCR-VIS Credit Rating Company Limited has upgraded the medium to long term entity rating of Allied Rental Modaraba (ARM) from ‘A’ (Single A) to ‘A+’ (Single A Plus). Short term rating has also been upgraded from ‘A-2’ (A-Two) to ‘A-1’ (A-One). Outlook on the assigned ratings is ‘Stable’.

The upgrade takes into account the healthy financial indicators of the modaraba. ARM has been able to post sustained growth in profitability, in line with increase in its rental fleet. With operating environment supporting the business of ARM, growth momentum in revenue streams is expected to continue, going forward. Liquidity profile of ARM is considered sound, supported by its ability to generate healthy cash flows.

Ratings incorporate the sustained internal capital generation, which has allowed ARM to maintain strong capitalization levels while undertaking regular capex over the years. Given that energy crisis remains unresolved, the modaraba plans to further expand its rental fleet of diesel and gas generators, in addition to increasing logistics and earth moving equipments in anticipation of higher development expenditure. Diversification in operating assets will continue to be tracked by JCR-VIS. Expansion in operating assets is planned to be funded through a mix of equity injection, internal capital generation and borrowings. Leverage indicators are projected to remain low.

Given the nature of modaraba’s operations, business risk is considered low. The management may nevertheless consider ways to improve documentation with clients to safeguard its ability to enforce contracts. While credit approval mechanism may also need to be formalized further, the ease of re-possession of assets mitigates the risk of default by clients. Moreover, the modaraba’s assets may be readily re-deployed at alternate sites.

Ratings derive strength from sponsor support received by ARM. The modaraba is managed by Allied Engineering Management Company (Private) Limited, which is a wholly owned subsidiary of Allied Engineering Services Limited (AESL). AESL is the dealer for Caterpillar products in Pakistan. AESL is also an authorized distributor of MCF Material Handling Equipment, Sany Cranes, Ingersoll Rand Compressors, Broad Chillers and IMW CNG Equipments in Pakistan.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311873.

Javed Callea

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 2013 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