Press Release

JCR-VIS assigns Initial Ratings to MIMA KNIT (Pvt) Limited

Karachi, September 25, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘BB/B’ (Double B/Single B) to MIMA KNIT (Pvt) Limited (MKPL). Outlook on the assigned ratings is ‘Stable’.

MIMA KNIT (Pvt) Limited is a private limited company that was incorporated in 2004. MKPL is part of the MIMA Group which has interest in cloth, leather and retail stores business. Ratings assigned to MKPL take into account downward trend in profitability, weak cash flow position in relation to outstanding debt and high leverage indicators that are expected to remain at similar levels. Room for improvement in corporate governance exists. The ratings, however, take into consideration the expertise and adequate strength of the sponsors.

MKPL’s profitability has demonstrated a negative trend with the company experiencing negative margins in FY17 due to the downturn of the sock manufacturing industry. Local industry has been adversely impacted as a result of international competition which has led to decline in the export sales of the company. In line with profitability, MKPL’s cash generation ability also weakened which subsequently resulted in deterioration of the debt servicing ability of the company.

Leverage indicators of the company have remained on the higher side on a timeline basis. The same decreased slightly for FY17 vis-à-vis the previous year, the management strategized limited expansionary measures awaiting improvement in the sock manufacturing industry. Gearing and leverage ratios are expected to remain high, going forward. The management expects market dynamics to recover to some extent in FY18 which is partly reflected in HY18 numbers, whereby breakeven in operating profit has been achieved. Management expects this to continue in the second half of FY18 as well, resulting in a notional profit for the full year.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311872.

Javed Callea

Applicable Criteria: Industrial Corporates (May 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