Press Release

VIS Reaffirms Entity Ratings of First Paramount Modaraba

Karachi, December 13, 2023: VIS Credit Rating Company Limited (VIS) Reaffirms Entity Ratings of First Paramount Modaraba to 'BBB/A-3' (Triple B/A-Three). Medium to long term rating of 'BBB' indicates adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short term rating of 'A-3' indicates satisfactory liquidity and other protection factors qualify entities / issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 21, 2022.

Incorporated in 1994 and managed by Paramount Investments Limited, First Paramount Modaraba (FPM) principally deploys funds through murabaha, modaraba, and musharaka arrangements along with operating multiple in-house ventures including chemical business, consultancy, supply of engineering products and solutions to upstream service companies, and electrical maintenance and troubleshooting services under the names of “FPM Petro Services”, “FPM Consulting”, “FPM Geo Dynamics International”, and “FPM Solutions” respectively. The Company has also launched an online screening facility which provides a cover against Anti-Money Laundering (AML) and Combating the Financing of Terrorism Compliance (CFT). The Modaraba is listed on the Pakistan Stock Exchange (PSX).

In FY23, the Modaraba Company recorded an uptick in revenues, primarily due to the performance of its in-house ventures. FPM Petro, in particular, recorded strong revenue growth which is expected to further increase on the back of its expanded product line. Despite the revenue growth, the entity's bottom line profitability was negatively impacted by increased finance costs. However, liquidity improved together with decline in debt leverage, indicating a stronger financial position in terms of both liquidity and solvency. FPM’s asset quality has remained satisfactory with gross Non Performing Loans (NPLs) at 1.6% of portfolio at end FY23.

On the strategic front, the entity is enhancing its operations through the establishment of FPM Compliance Pvt Ltd, focusing on scaling up AML CFT business areas. Despite positive developments, the balance sheet growth has been restricted due to limitations on deposit mobilization. The Securities & Exchange Companies of Pakistan (SECP) issued "The Modaraba Regulations 2021," setting requirements for Modaraba firms, including a minimum Rs. 500 million equity, an 8% CAR for the first two years and 10% thereafter, and 'A-' credit rating. FPM, while compliant with the CAR requirement, falls short on minimum capital requirement. FPM has been granted a 3 year extension till 2025 for compliance of the same. The Modaraba Company plans to raise equity through Sukuk/right shares. Meeting of minimum capital requirements within the timeline will remain important for ratings.

For further information on this ratings announcement, please contact Nikeeta Rani at 021-35311861-64 (Ext. 215) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

Applicable Rating Criteria: Corporates (May 2023):

VIS Issue/Issuer Rating Scale

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .