Press Release
JCR-VIS Assigns Initial Ratings of BBB/A-3 to MIMA Leather (Pvt.) Ltd.
Karachi, April 23, 2010: JCR-VIS Credit Rating Company Ltd. has assigned a medium to long term rating of ‘BBB’ (Triple B) and short-term rating of ‘A-3’ (A-Three) to MIMA Leather (Pvt.) Ltd. Outlook on the medium to long-term rating is ‘Stable’.
Ratings derive comfort from support of main sponsors who have a long history of operating in the leather sector. The group specializes in processing of leather, used mainly in the manufacture of garments, footwear and other value added leather based products, and is an export oriented unit.
Leather is the Pakistan’s third largest export sector after textile and rice. Being a luxury product it is exposed to cyclical changes in the economy. The recessionary pressures in the local and global economy in the outgoing year have kept the industry under stress with rising cost of input and falling exports. Lower demand in the international market has resulted in lower prices as well as a decline in sales volume. However, rupee devaluation proved favorable for export based units and provided considerable relief against declining prices. On account of the on-going global economic recovery, exports are expected to improve going forward.
MIMA has not made any significant capital expenditure over last few years, though there has been added focus on non-capital intensive value additions to optimize margins, which is expected to continue. Due to focus on value added products, margins have improved leading to higher profitability, despite a dip in sales since FY08. Lower quantum of sales has led to increase in inventory levels and higher short term borrowings, which are expected to reduce as sales pick up. JCR-VIS will track MIMA’s ability to maintain margins and reduce inventory levels.
For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 604) or Ms. Sabeen Saleem (Ext: 510) at 35311861-70 (10 lines) or fax to 35311873.
Faheem Ahmad
President & CEO