Press Release
JCR-VIS Reaffirms Entity Ratings of Universal Leather (Pvt.) Ltd.
Karachi, December 24, 2010: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the medium to long-term entity ratings of Universal Leather (Pvt.) Ltd (ULPL) at ‘BBB+’ (Triple B Plus) and short-term rating at ‘A-3’ (A Three). Outlook on the rating has remained ‘Stable’.
The leather industry has been affected by the global economic and financial recession, affecting the purchasing power of international consumers. Despite the dip in prices, rupee devaluation against major currencies and a volumetric increase in sales has helped maintain revenues of ULPL during FY10. However, cash flows remain constrained on account of narrow margins, which may be further impacted in FY11 by the increase in raw material prices due to flood related livestock losses. Nevertheless, the proposed zero tariff incentive for Pakistan’s leather sector on export to European markets, may support the company’s earnings going forward.
The company has provided sizeable funding support to associated companies and the debt leverage adjusted for this is considerably high. The management plans to gradually reduce support to associates as these concerns become self reliant or are disposed off.
For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 408) or Ms. Sabeen Saleem (Ext: 510) at 021-35311861 or fax to 021-35311873.
Faheem Ahmed
President & CEO