Press Release

VIS Maintains Entity Ratings of Universal Leather (Pvt) Ltd

Karachi, November 18 , 2021: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of Universal Leather (Pvt) Limited (ULPL) at ‘BBB-/A-3’ (Triple B Minus/A-Three).The long term rating of ‘BBB-’ signifies adequate credit quality, reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. The short term rating of A-3 indicates satisfactory liquidity and other protection factors that qualify entities/issues as to investment grade. Risk factors are larger and subject to more variation; however timely payment is expected. Outlook on the assigned ratings has been revised from ‘Rating Watch Negative’ to ‘Positive’. Previous rating action was announced on October 01, 2020.

Revision in rating outlook takes into account ULPL’s recovery in its performance metrics and overall growth observed in leather exports post ease in COVID-19 lockdown measures. Pakistan’s leather based exports observed recovery and posted modest growth in FY21 vis-à-vis FY20. Further growth is also seen in 2MFY22 period. Going forward, leather products demand is expected to stay sound on account of better demand prospects generating from US and European countries following lifting of lockdowns as major segment of population has been vaccinated. ULPL’s sales are largely export based with Europe as the main market for its product. While client concentration in sales is high, the same is mitigated through established business relationships. The Company has attained ESG related certifications that will help enhance its image and aid in fetching higher export volumes.

Assessment of financial risk profile incorporates improving profitability and leverage indicators with adequate liquidity profile. Topline of the company posted modest growth during FY21 mainly driven by better prices achieved of cow skin in export market. Significant uptick in gross margins was recorded on the back of higher average selling prices and lower prices of key input. Profitability was further supported by lower finance cost and one-off event in other income. The Company’s debt profile is short term in nature with improvement seen in capitalization indicators. Liquidity profile of the company improved in the outgoing year yet elongated working capital cycle is a constraint.

The ratings are dependent on the Company’s ability to sustain business margins through operational efficiencies and product quality. Prudent management of working capital cycle and maintaining leverage indicators in line with assigned ratings will be important.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext: 202) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (August 2021)

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 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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited