Press Release

JCR-VIS Assigns Entity Ratings of BBB+/A-3 to Universal Leather (Pvt.) Ltd.

Karachi, Apr 07, 2009: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned an initial medium to long-term entity rating of BBB+ (Triple B Plus) and short-term rating of A-3 (A Three) to Universal Leather (Pvt.) Ltd. (ULPL). The outlook on the medium to long-term rating is ‘Stable”.

The assigned ratings take into account the sponsors’ long history of successful operations in the leather industry during which the MIMA group has established their standing as quality, export oriented producers among the largest leather groups in Pakistan. Over time, the group has ventured into different niches as suppliers to footwear and garments manufacturers as well as producers of other value-added goods. ULPL stands as the highest revenue generating company of the group.

The global trade of leather products is subject to cyclical demand patterns. Low level of margins of ULPL has precluded buildup of cash reserves which could provide liquidity support to the company during a cyclical downturn. Further, as a business strategy as well as due to seasonal variations in availability of raw material, an aggressive inventory policy of maintaining substantial inventory of finished and semi finished goods is pursued to meet the stringent delivery requirements of the customers. However, these constraints are mitigated by the low level of leverage employed, reducing the need for large cash outlays. Also, there are no major expected capital expenditure requirements in the next few years as the factory is operating below capacity at the moment.

ULPL has provided sizeable amount of loans to associated companies. The group management intends to dispose off the assets of one of the associated companies and ULPL is expected to receive a portion of the provided loan in FY09 after the disposal. Leverage of the company is, therefore, expected to further go down as the management intends to use the recovered loan for the repayment of existing short term debt.

For further information on this rating announcement, please contact the undersigned (safdar@jcrvis.com.pk) or Ms. Sabeen Saleem (sabeen@jcrvis.com.pk) at 021-5311861 or fax to 021-5311873.


Safdar Kazi
Director

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 2009 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .