Press Release

VIS Reaffirms Ratings of Allied Rental Modaraba

Karachi, June 11, 2021: 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 December 26, 2019.

The ratings assigned to ARM take into account the company being a wholly owned subsidiary of Allied Engineering & Services (Pvt) Limited (AESL); the latter is the market leader in generator rental business. The implicit support available from AESL, the authorized dealer of Caterpillar (CAT) products in Pakistan, remains a key rating driver. The ratings are underpinned by sound financial risk profile of the company emanating from relatively conservative capital structure, low leverage indicators, adequate liquidity and maintained asset quality with non-performing portfolio being fully provided. In the backdrop of improving power situation in the country, the management’s business strategy envisages diversification from power business towards logistics and construction machinery segments. The profitability metrics exhibited slight deterioration owing to curtailed business operations leading to lower deployment of assets amid depressed economic environment in line with prevalent pandemic situation. Given the potential adverse impact on borrowers’ repayment capacity due to COVID-19, management will be targeting cautious growth in ijarah assets going forward. Moreover stemming from asset consolidation strategy, debt mobilization is projected to be limited going forward. The ratings are dependent on the management's ability in sustaining its competitive positioning while keeping the financial profile intact.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) or email at .

Javed Callea

Applicable rating criterion: Non-Bank Financial Companies (March 2020)

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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