Press Release

JCR-VIS Reaffirms Entity Ratings of Universal Leather (Pvt.) Limited

Karachi, February 13, 2012: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the medium to long-term entity rating of Universal Leather (Pvt.) Ltd. (ULPL) at ‘BBB+’ (Triple B Plus) and short-term rating at ‘A-3’ (A-Three). Outlook on the medium to long term rating is ‘Stable’.

ULPL is part of the MIMA group of companies and is engaged in the manufacturing of finished leather from cow and buff hides. Apart from ULPL, 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.

ULPL has a processing capacity of about 2.5m square feet per month. Net turnover of ULPL marginally improved in FY11, with sales primarily targeted towards export markets. With an increase in raw material prices, margins were lower for FY11, with a similar impact on cash flows.

A significant amount of capital has been tied up in inventory, with higher volumes carried at end-FY11 on account of increase in raw material prices and decline in sales volume during the out-going year. A large part of the company’s equity is deployed in associates. ULPL has recently concluded sale transaction of a subsidiary, against which the company had significant exposure. Realization of sale proceeds from the same would allow the company to retire borrowings, and alleviate pressure on cash flows in the backdrop of squeezing margins.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861 or fax to 021-35311873.


Jamal Abbas Zaidi
Deputy CEO

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 2012 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .