Press Release
JCR-VIS Revises Entity Ratings of MIMA Leather (Pvt.) Ltd.
Karachi, October 09, 2017: JCR-VIS Credit Rating Company Limited has downgraded the entity ratings of MIMA Leather (Pvt.) Limited (MLPL) to ‘BBB-/A-3’ (Triple B Minus/A-Three) from ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned ratings is ‘Negative’. Previous rating action was announced on June 3, 2016.
Given the fall in global trade volumes of leather, financial profile of MLPL has weakened on a timeline basis. Export sales of goat skins which comprise a bulk of revenues suffered a setback in terms of volumes during the outgoing year resulting in a sizeable operating loss. During FY17, capitalization levels were supported by higher income through gain on sale of investment property. However, majority gain was offset by operating loss in FY17. In this regard, the capitalization strength and ratings of MIMA will be underpinned on sustainable capitalization. Assigned ratings are supported by the track record of sponsors having business cycle experience in leather industry.
Management plans to improve the topline in export and local market both in terms of prices and volumes in the ongoing year. Given the weak export outlook for their leather products, this would be a challenging task. Hence, profitability is expected to remain under pressure given lower selling prices and subdued demand of leather products. While leverage indicators remain at higher levels, borrowings are entirely short term in nature and matched by sizeable stock-in-trade, being reduced year-on-year, carrying revaluation risks.
For further information on this rating announcement, please contact the undersigned (Ext: 207) at 35311861-70 (10 lines) or fax to 35311873.
Jamal Abbas Zaidi
Advisor
Applicable Rating Criteria: Industrial Corporates (October 2003)
http://www.jcrvis.com.pk/images/IndustrialCorp.pdf