Press Release

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

Karachi, April 9, 2014: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of MIMA Leather (Pvt.) Limited (MLPL) at ‘BBB/A-3’ (Triple B/A-Three). Outlook on the medium to long term rating is ‘Stable’.

Leather industry enjoys the fourth largest share in exports and contributed about 4.9% to the country’s exports in the out-going year. Exports mainly comprised finished leather (44%) and leather garments (33%). The sector is largely fragmented, with several players operating at varying scales.

MLPL has been operating in the leather sector for several decades. Shareholding is vested with family members who are represented on the company’s Board of Directors while also holding key management positions. The company was able to post some growth in revenues in FY13, though gross margins declined during the period despite continuing Rupee depreciation. Results for the on-going year may be affected by Rupee appreciation witnessed in 1QCY14.

In line with reduced margins, internal cash generation was lower in FY13. While FFO to total debt remains nominal, borrowings are entirely short term in nature and matched by stock-in-trade. As per management, inventory levels may persist on the higher side. Long inventory holding period and associated finance cost may have some negative impact on the company’s bottom line unless it is off-set by higher product prices.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311873.

Jamal Abbas Zaidi
Deputy 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 2014 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