Press Release

JCR-VIS Reaffirms Ratings of Allied Rental Modaraba

Karachi, December 31, 2018: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Allied Rental Modaraba (ARM) at ‘A+/A-1’ (Single A Plus/A-One). The long term rating of ‘A+’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short term rating of ‘A-1’ depicts high certainty of timely payment where liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 2, 2017.

Current ratings of the company take into consideration strong financial profile along with adequate leverage and liquidity indicators. ARM, a wholly owned subsidiary of Allied Engineering & Services (Pvt) Limited (AESL), is the market leader in generator rental business. Support from AESL, the authorized dealer of Caterpillar (CAT) products in Pakistan, remains a key rating factor.

In line with its diversification strategy, revenue base of the company increased on the back of its logistics and construction machinery business. In order to procure machinery for expanding these business streams, the company procured additional debt. As a result, bottom line of ARM was adversely impacted on account of higher finance and depreciation expenses. Going forward, significant amount of additional debt will not be required given that liquidity will be generated from settling of its outstanding receivables. Deployment level of rental fleet and support in revenues from logistics and construction projects will remain key rating drivers.

With stable internal capital generation, capitalization levels have strengthened over the years. Subsequently, leverage indicators remain within manageable levels despite additional debt mobilized. Going forward, further expansion in operating assets is kept on hold given the prevailing market dynamics. Ability to maintain leverage at moderate levels while pursuing growth related objectives will remain important. Liquidity indicators are also considered adequate.

For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 207) or Ms. Muniba Khan (Ext: 215) at 35311861-70 (10 lines) or fax to 35311873.

Atiq Anwar Mahmudi

Applicable Rating Criteria: Non-Bank Financial Companies (October 2017)

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 2018 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