Press Release

Ratings of Saudi Pak Industrial and Agricultural Investment Company Limited

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Karachi, July 2, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Saudi Pak Industrial and Agricultural Investment Company Limited (Saudi Pak) at ‘AA/A-1+’ (Double A/A One Plus) with ‘Positive’ Outlook.

Ratings assigned to Saudi Pak draw comfort from the company’s ownership structure, with shareholding vested with Government of Pakistan (GoP) and Kingdom of Saudi Arabia (KSA). KSA has outstanding ratings of ‘AA-/A1+’ with a Positive Outlook from an international credit rating agency.

In recent years, the management’s focus has remained on recoveries against outstanding loans while maintaining a conservative stance on building the loan book. Accordingly, contraction in lending activities has been witnessed over time. Meanwhile, recoveries and additional provisions booked against NPLs as well as reduction in NPLs have reduced the proportion of net non-performing assets carried by the company in relation to its capital base. As a result of balance sheet re-profiling, non-yielding assets have reduced in recent years.
With higher internal liquidity generation, the management made concerted efforts to shed high cost borrowings during FY13 that had a positive impact on core earnings. The management has embarked upon a growth oriented strategy from FY14 onwards primarily geared towards selective participation in project financing and private equity deals. The company may need to build the management team further for undertaking the planned expansion in lending activities. JCR-VIS will closely monitor any meaningful developments in this regard and may revisit ratings accordingly.
Almost half of the company’s investment portfolio is deployed in government securities, where market risk is managed by investing primarily in short-term instruments. Return on equity portfolio has been higher than the benchmark index.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-72 or fax to 021-35311873 or Mr. Maimoon Rasheed at 042-36610681-84.

Javed Callea

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2014 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