Press Release

VIS Reaffirms Entity Ratings of Shafi Lifestyle (Pvt.) Limited

Karachi, March 6, 2025: VIS Credit Rating Company Limited reaffirms entity ratings of Shafi Lifestyle (Pvt.) Limited (‘SLPL’ or ‘the Company’) at 'A-/A2' (‘Single A minus’/ ‘A Two’). Medium to long term rating of 'A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous rating action was announced on January 11, 2024.

Shafi Lifestyle (Pvt.) Limited, established in 2009, specializes in the manufacture and sale of leather footwear. The Company has its registered office at Shafi House, Karachi, Sindh, and runs its production facility in Lahore, Punjab. The Company focuses on delivering leather footwear products mostly in the export markets.
The assigned ratings reflect the Company’s long-standing experience in the fashion leather footwear export sector, which is characterized by a medium business risk profile. However, cyclicality risks arise from changes in consumer preferences tied to international economic and fashion trends. Moreover, the sector’s reliance on imported raw materials, such as sole material, exposes it to exchange and transfer risk.

Assigned ratings also consider the Company's financial profile, which includes a decline in topline driven by lower export volumes amid subdued demand in key export markets and absence of PKR depreciation. SLPL experienced a reduction in gross margins in FY24 due to escalating energy costs and lower sales volume. Net margins were further constrained by elevated finance costs resulting from elevated level of Interest rates. The Company's high client concentration risk, given long association, remains significant; however, conservative capitalization metrics, healthy coverages, and an adequate liquidity profile provide support to the assigned ratings.

Going forward, the recovery of topline and profitability indicators will be a key factor in ratings, while maintaining capitalization, liquidity, and coverage profiles remains important.

For further information on this ratings announcement, please contact 021-35311861-64 or email at info@vis.com.pk.


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

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