Press Release

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

Karachi, May 20, 2016: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Universal Leather (Pvt.) Limited (ULPL) at ‘BBB+/A-3’ (Triple B Plus/A-Three). Outlook on the medium to long term rating is ‘Stable’. The previous rating action for ULPL was announced on May 4th, 2015.

The global trade of leather products is subject to cyclical demand patterns while the gross margins in the business have also seen notable volatility. Leather industry in Pakistan is largely export-oriented with third largest contribution to the country’s total exports. With slowdown in Eurozone & China and significant depreciation of Euro against PKR, leather exports have witnessed a significant decline. Given the current sector dynamics, financial profile of ULPL has weakened on a timeline basis.

Sales suffered a setback during FY15 due to reduced export demand which along with higher inventory entailing financial charges had a negative effect on margins. This resulted in a loss during FY15. The management has enhanced focus on reducing inventory levels on account of which purchases have been curtailed in the ongoing year.

The ratings of ULPL derive strength from track record of sponsors having business cycle experience in the leather industry. Shareholding is vested with family members who are represented on the company’s Board of Directors while also holding key management positions. Ratings also reflect support from sponsors in the form of equity to the tune of Rs. 175m, of which, Rs. 100m has already been injected in the ongoing year.

For further information on this rating announcement, please contact the undersigned (Ext: 508) at 35311861-70 (10 lines) or fax to 35311873.

Mohammed Khalid Ali

Applicable Rating Criteria: Industrial Corporates (October 2003)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2016 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited