Press Release

VIS Maintains Entity Ratings of Universal Leather (Pvt.) Limited

Karachi, February 29, 2024: VIS Credit Rating Company Limited (VIS) maintains entity ratings of Universal Leather (Pvt.) Limited (ULPL) at 'BBB/A-3' (‘Triple BBB/A-Three’). Medium to long term rating of 'BBB' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of 'A-3' indicates satisfactory liquidity and other protection factors qualify entities / issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings has been changed to ‘Positive’ from ‘Stable’. Previous rating action was announced on January 30, 2023.

Universal Leather (Pvt.) Limited (ULPL) was incorporated in Pakistan in 1968 as a public listed company and was later converted to a private entity in 2004. The Company specializes in tanning leather from cow and buffalo hides. Its manufacturing facilities are located at Karachi and Lahore, with a registered office in Korangi Industrial Area, Karachi. The Company is a family-owned business with extensive experience in the leather industry, including knitwear, apparels, and leather product retail stores. The Company also holds investments in associated companies, MIMA Leather and MIMA Knit, contributing significantly to its asset base.

Assigned ratings incorporate the medium business risk profile attributed to the leather sector, characterized by its export-oriented nature, which shields it from currency depreciation. Moreover, with high reliance on locally sourced raw materials, exchange rate risk is further mitigated. However, the sector remains vulnerable to cyclicality in international markets.

Change in outlook is underpinned by improvement in the profitability profile driven by higher topline growth and the net benefit of currency depreciation on margins. Moreover, the coverage profile is strengthened by increased operational profitability and cash flows. The capitalization metrics have improved due to lower short-term debt drawdown, contributing to better gearing and leverage ratios. However, the liquidity position continues to remain adequate and commensurates with the assigned ratings.

Going forward, ratings will remain sensitive to continued improvement in the Company’s profitability, capitalization, coverage and liquidity metrics.

For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 207) at 021-35311861-64 or email at info@vis.com.pk.







Sara Ahmed
Director

Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .