Press Release

Ratings of Treet Corporation Limited

Karachi, December 08, 2015: 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 (TCLTC) 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 and TCLTC was announced on February 23, 2015. The previous rating action on sukuk was announced on April 10, 2015.
Ratings assigned to TCL reflect its low business risk profile emanating from presence in segments depicting stable sales, leading market position and established brand in the double edge blade segment. Equity base of the company has strengthened on a timeline basis while low level of debt and adequate cash flow coverage provides comfort to assessment of financial risk. Sponsor support is reflected by equity injection by way of right share issuance, twice in the last three years.
While maintaining foothold in the local market, export sales of razor/blades segment, TCL’s core business activity, remained subdued on account of slowdown and security issues in key export markets. Margins improved in soap and corrugated packaging segment while margins in razor/blades segment declined marginally, though remained healthy. Higher production capacity is expected to augment volumes in the razor/blade segment while overall margins are expected to sustain.
Liquidity profile of the company remained sound. Cash flows are considered adequate to service debt. Availability of undrawn bank lines and sufficiently liquid investment portfolio provides financial flexibility to the company. While profitability of the company remained intact during FY15, Funds from Operations (FFO) to total debt declined attributable to increased finance cost incurred on higher average utilization of borrowings.
Various expansion plans are underway which pertain to new business segments including manufacturing facility for the production of lead acid batteries, educational project, hospital and commercial complex. Financing for these projects is proposed to be raised mainly through equity.
The company plans to issue a perpetual Sukuk amounting to Rs. 539.5m to meet working capital requirements. The sukuk is to be issued in perpetuity to existing shareholders in the ratio of one Sukuk against 10.22 ordinary shares.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13.

Jamal Abbas Zaidi
Deputy CEO

Applicable Criteria:

Industrial Corporates (Oct. 2003)
Rating the Issue (Sept 2014)

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JCR-VIS Credit Rating Company Limited