Press Release

Ratings of Treet Corporation Limited

Karachi, December 20, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Treet Corporation Limited (TCL) at ‘AA-/A-1’ (Double A Minus/A-One). Rating of Participation Term Certificates (PTC) has been reaffirmed at ‘AA’ (Double A).Preliminary rating of AA- (Double A Minus) assigned to TCL proposed Sukuk issue has also been reaffirmed. Outlook on the ratings is ‘Stable’. The previous rating action on entity, PTC and sukuk was announced on December 08, 2015.

Ratings assigned to TCL reflect its low business risk profile emanating from continued robust performance by key business segments of the company including razors and razor blades, soaps and corrugated packaging. Ratings also take into account strong ownership profile of the company; sponsor support has been demonstrated by way of right share issuance. Resultantly, equity base of the company has strengthened on a timeline basis while low level of debt and adequate cash flow coverage continues to provide comfort to the assessment of financial risk.

Various expansion plans are underway which pertain to new business segments including manufacturing facility for the production of lead acid batteries and educational project. Funding for the projects has been arranged though equity and internal sources ensuring low financial risk on TCL’s balance sheet. The ability of the management to transform these projects into profit generating avenues would be seen overtime.

Liquidity profile of the company remained sound. Availability of undrawn bank lines provides financial flexibility while strong Funds from Operations (FFO) also improved company’s FFO to total debt ratio. Capitalization related indicators improved owing to issuances of right shares and mandatory conversion of PTC into equity.

The company plans to issue a perpetual Sukuk amounting to Rs. 539.5m to meet working capital requirements. The sukuk is to be issued in perpetuity to existing shareholders and will be listed on Pakistan Stock Exchange (PSX).

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).


Javed Callea
Advisor

Applicable Rating Criterion: Industrial Corporate (May 2016)


Notching the Issues (June 2016)

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 December 20, 2016 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.