Press Release

Ratings of Treet Corporation Limited

Karachi, February 08, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Treet Corporation Limited (TCL) at ‘AA-/A-1’ (Double A Minus/A-One). Rating of Participation Term Certificates (PTC) has been reaffirmed at ‘AA’ (Double A). Preliminary rating of AA- (Double A Minus) assigned to TCL proposed Sukuk issue has also been reaffirmed. Outlook on the ratings is ‘Stable’. The previous rating action on entity, PTC and sukuk was announced on December 20, 2016.

The ratings reflect TCL’s low business risk emanating from its major reliance on segment having largely inelastic demand. The ratings also take into account demonstrated support by primary sponsor in terms of continuing equity injection. While debt leverage has somewhat increased in FY17, the management intends to rationalize it with further capital injection, going forward. The company is venturing into different businesses to diversify associated risks.

During FY17, overall sales of the company increased on account of increase in sales of razor & razor blades, batteries, motorbikes and additional pharmaceutical business while sales of corrugated packaging declined. Sales of razor & razor blades, soaps and corrugated packaging represented around 94% of total sales of the company. Liquidity profile of the company remained adequate. By end-FY17, short-term investments increased on account of increased investment in listed equities. Cash flows are considered adequate to timely service debt obligations.

Various expansion plans are underway including production of lead acid batteries and initiation of educational project. Commencement of local production of batteries and educational project has witnessed delay; these are expected to come online shortly. In the backdrop of further business diversification, TCL has acquired majority stake in a pharmaceutical company and has also signed an agency agreement with one of the premier epoxy producers for sales & marketing of their industrial chemicals in Pakistan. The company plans to finance upcoming projects mainly through internal sources, going forward. The company’s ability to maintain its risk profile while venturing into various new businesses would be tested over time.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable Rating Criterion: Industrial Corporate (May 2016)

Notching the Issues (June 2016)

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 2018 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