Press Release
JCR-VIS Reaffirms Entity Ratings of MIMA Leather (Pvt.) Ltd.
Karachi, February 13, 2012: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of MIMA Leather (Pvt.) Limited (MIMA) at ‘BBB/A-3’ (Triple B/A-Three). Outlook on the medium to long term rating is ‘Stable’.
MIMA is part of the MIMA group of companies and is engaged in the manufacturing of finished leather from goat and sheep skins. Apart from MIMA, two other group companies operate in the leather sector; these are engaged in tanning operations & production of leather garments & accessories. Combined sales of the three entities were over Rs. 2.5b in FY11.
Sales growth of MIMA has continued for the second consecutive year in FY11. Aggregate leather exports of Pakistan also picked up to $1.1b in FY11. Despite higher volumes of sales during FY11, cash flows from operations weakened on account of lower margins registered during the period. The leather industry in Pakistan is presently faced with downward pressure on margins on account of a significant increase in prices of raw skins. A combination of higher interest rates and lower margins could place strain on the company’s ability to service debt.
In the past, MIMA has received sponsor support in the form of interest free loans, the quantum of which increased slightly in FY11. The group has recently concluded sale transaction of a company, which is likely to reduce overall debt levels within the group entities. Ratings derive comfort from the improved liquidity position of associated concerns.
For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 35311861-70 (10 lines) or fax to 35311873.
Jamal Abbas Zaidi
Deputy CEO