Press Release

JCR-VIS Reaffirms entity ratings of Grays Leasing Limited

Karachi, December 11, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Grays Leasing Limited (GLL) at ‘BB-/B’ (Double B Minus/Single B). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on October 22, 2013.

GLL remains non-compliant with the minimum equity requirement of Rs. 700m applicable to leasing companies. The license of the company to carry out business expired in May 2010. The Securities and Exchange Commission of Pakistan (SECP) approved one year forbearance period to allow the company to meet the equity requirement while restricting it from mobilizing funding via deposits or rollover of existing deposits without prior consent and approval of SECP. The forbearance period expired on July 2011 after which SECP has not granted further extension. In this regard, no correspondence was made with SECP during the outgoing year. The breach of the equity requirement has raised concerns with regards to the ability of the company to continue as a going concern. GLL is conducting leasing business on a limited basis. In this regard, licensing fees have been paid along with sharing of portfolio information with SECP.

While continuing its focus on recoveries, the company booked selective fresh lease contracts in order to cover administrative expenses. New business largely pertained to car leasing to individuals/traders who were recommended by sponsor directors. Management expects quality of new business to remain sound as directors have personal acquaintance with the new lessees. Lease income received was lower than operating cash expenses for FY14.

As against a modest profit in the previous year, the company posted a nominal loss during FY14 primarily on account of some write-offs. Going forward, profitability of the company will remain contingent upon the quality of fresh leases and timely recovery of non-performing portfolio. Fresh equity injection is required to reinstate the risk profile of the company.

For further information on this rating announcement, please contact Mr. Javed Callea at 021-35311681-70 or Mr. Maimoon Rasheed at 042-36610681-84.


Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: Non-Bank Financial Companies (March, 2005)

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