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Karachi: 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 and production of leather garments and 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 more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk