Press Release
JCR-VIS Reaffirms Entity Ratings of Universal Leather (Pvt.) Ltd.
Karachi, April 9, 2014: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Universal Leather (Pvt.) Limited (ULPL) at ‘BBB+/A-3’ (Triple B Plus/A-Three). Outlook on the medium to long term rating is ‘Stable’.
Leather industry enjoys the fourth largest share in exports and contributed about 4.9% to the country’s exports in the out-going year. Total exports mainly comprised finished leather (44%) and leather garments (33%). The sector is largely fragmented, with several players operating at varying scales.
ULPL has been operating in the leather sector for several decades. Shareholding is vested with family members who are represented on the company’s Board of Directors while also holding key management positions.
The company posted improved sales for the out-going year on the back of both higher volumes and prices of its products. Margins also recouped in this period, translating into an improved bottom line from core operations. The company maintains a conservative capital structure with borrowings mobilized for working capital management. There is no long term debt on books. Moreover, investments are strategic in nature and there is minimal amount of liquid assets carried on balance sheet. The borrowings and trade payables balance is however well matched by stock-in-trade and trade debts.
Going forward, increasing working capital requirements may exert some pressure on the bottom line unless off-set by higher product prices. Moreover, Rupee appreciation in 1QCY14 is likely to have an adverse impact on the company’s margins.
For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311873.
Jamal Abbas Zaidi
Deputy CEO