Press Release

JCR-VIS Revises Entity Ratings of MIMA Leather (Pvt.) Ltd.

Karachi, October 09, 2017: JCR-VIS Credit Rating Company Limited has downgraded the entity ratings of MIMA Leather (Pvt.) Limited (MLPL) to ‘BBB-/A-3’ (Triple B Minus/A-Three) from ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned ratings is ‘Negative’. Previous rating action was announced on June 3, 2016.

Given the fall in global trade volumes of leather, financial profile of MLPL has weakened on a timeline basis. Export sales of goat skins which comprise a bulk of revenues suffered a setback in terms of volumes during the outgoing year resulting in a sizeable operating loss. During FY17, capitalization levels were supported by higher income through gain on sale of investment property. However, majority gain was offset by operating loss in FY17. In this regard, the capitalization strength and ratings of MIMA will be underpinned on sustainable capitalization. Assigned ratings are supported by the track record of sponsors having business cycle experience in leather industry.

Management plans to improve the topline in export and local market both in terms of prices and volumes in the ongoing year. Given the weak export outlook for their leather products, this would be a challenging task. Hence, profitability is expected to remain under pressure given lower selling prices and subdued demand of leather products. While leverage indicators remain at higher levels, borrowings are entirely short term in nature and matched by sizeable stock-in-trade, being reduced year-on-year, carrying revaluation risks.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 35311861-70 (10 lines) or fax to 35311873.

Jamal Abbas Zaidi

Applicable Rating Criteria: Industrial Corporates (October 2003)

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 2017 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