Press Release

JCR-VIS Assigns Initial Ratings of BBB/A-3 to MIMA Leather (Pvt.) Ltd.

Karachi, April 23, 2010: JCR-VIS Credit Rating Company Ltd. has assigned a medium to long term rating of ‘BBB’ (Triple B) and short-term rating of ‘A-3’ (A-Three) to MIMA Leather (Pvt.) Ltd. Outlook on the medium to long-term rating is ‘Stable’.

Ratings derive comfort from support of main sponsors who have a long history of operating in the leather sector. The group specializes in processing of leather, used mainly in the manufacture of garments, footwear and other value added leather based products, and is an export oriented unit.

Leather is the Pakistan’s third largest export sector after textile and rice. Being a luxury product it is exposed to cyclical changes in the economy. The recessionary pressures in the local and global economy in the outgoing year have kept the industry under stress with rising cost of input and falling exports. Lower demand in the international market has resulted in lower prices as well as a decline in sales volume. However, rupee devaluation proved favorable for export based units and provided considerable relief against declining prices. On account of the on-going global economic recovery, exports are expected to improve going forward.

MIMA has not made any significant capital expenditure over last few years, though there has been added focus on non-capital intensive value additions to optimize margins, which is expected to continue. Due to focus on value added products, margins have improved leading to higher profitability, despite a dip in sales since FY08. Lower quantum of sales has led to increase in inventory levels and higher short term borrowings, which are expected to reduce as sales pick up. JCR-VIS will track MIMA’s ability to maintain margins and reduce inventory levels.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 604) or Ms. Sabeen Saleem (Ext: 510) at 35311861-70 (10 lines) or fax to 35311873.

Faheem Ahmad
President & 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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2010 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited