Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of First Paramount Modaraba at 'BBB/A3'. The ratings reflect adequate credit quality with a stable outlook. The medium to long-term rating of 'BBB' signifies reasonable protection factors, while the short-term 'A3' rating indicates a fair likelihood of timely debt repayment. Previous rating action was announced on December 13, 2023.

According to a statement by VIS Credit Rating Company Limited, First Paramount Modaraba is a multipurpose entity listed on the Pakistan Stock Exchange, managed by Paramount Investments Limited. The Modaraba engages in financing through murabaha, modaraba, and musharaka arrangements, and operates ventures including FPM Solutions, FPM Petro Services, and FPM AML - CHECK.

In fiscal year 2024, FPM adopted a conservative lending approach, reallocating resources towards ventures with higher yields. Despite a contracted financing portfolio, asset quality remains stable with minimal non-performing assets. FPM Petro Services significantly contributes to revenue, and new initiatives in AML/CFT compliance are underway. The liquidity profile indicates an ability to meet short-term obligations.

The revenue profile presents a concern with 96% of earnings from FPM Petro Services, highlighting business risk concentration. While FPM Petro is the only profitable segment, ratings are contingent on sustaining income from ventures and success of new initiatives.

Balance sheet growth faces constraints due to partial compliance with "The Modaraba Regulations 2021" by the SECP. Although FPM meets the Capital Adequacy Ratio, it falls short of the minimum capital threshold. An equity enhancement plan submitted in December 2024 is pending SECP approval, crucial for future ratings review.