Press Release

JCR-VIS maintains ratings of First Paramount Modaraba

Karachi, December 30, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the entity ratings of First Paramount Modaraba (FPM) at ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 31, 2015.

Ratings incorporate conservative risk profile of the Modaraba with gradual improvement in equity levels over the years as a result of internal profit generation and issuances of right shares. Leverage indicators continue to remain within manageable levels; although the same have depicted growth on a timeline basis. Moreover, liquidity position of the company remained within prudent limits.

Certificates of Musharakah (CoMs) remain the primary source of funding for the company; however, given the restrictions imposed by the regulator on raising additional COMs, the company may have to seek alternate sources of funding in order to achieve targeted growth in portfolio. Financing portfolio (net of deferred income) of the company primarily comprises Murabaha financing; portfolio mix is expected to remain the same in the coming years.

In contrast to the previous years, growth in profitability was observed during FY16. Higher profit was driven by its murabaha financings and in-house modaraba projects. Moreover, discontinuation of loss-making businesses also aided in improving net profit of the modaraba. Returns from in-house ventures are expected to increase sizeably in the future years. However, quality of the financing portfolio must be maintained in order to ensure sustainability and growth in earnings.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi
Advisor

Applicable Rating Criteria: Modaraba Rating Scale (October 2002)
http://www.jcrvis.com.pk/images/JCR-Mod.pdf

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 2016 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .