JCR-VIS Credit Rating Company Ltd (JCR-VIS) has reaffirmed the medium to long-term entity of BBB- (Triple B minus) and short-term rating of A-3 (A Three) assigned to MIMA Leather (Private) Limited (MIMA). The outlook on the medium to long-term rating is 'Stable.'
The ratings basically takes into account the position of the MIMA group as one of the leading leather exporters from Pakistan. The absence of long-term debt in conjunction with the fact, that there appears to be no requirement to raise funding for any significant capital expenditure in the foreseeable future. This is complemented by the demonstrated liquidity support available to MIMA from other group companies.
Although the company incurred a slight loss in FY 2006 on account of reduced sale of intermediate products and rising financial charges, JCR-VIS is of the opinion that this is in keeping with the overall cyclical behaviour of the leather industry, which had been factored into the original rating. The main risk factors that require monitoring are the inventory levels and the consequent dependence on short-term borrowings to finance working capital requirements.-PR