VIS Credit Rating Company Revises Entity Ratings of Universal Leather (Private) Ltd; Outlook changed from 'Negative' to 'Stable'. - Press Release issued by VIS Credit Rating Company Limited.

Lahore -- May 09, 2019 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited has revised the entity ratings of Universal Leather (Pvt.) Limited (ULPL) from 'BBB/A-3' (Triple B/A-Three) to 'BBB-/A-3' (Triple B Minus/A-Three). Long Term Rating of 'BBB-' reflects adequate credit quality, reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short Term Rating of 'A-3' denotes 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 medium to long term rating has been revised from 'Negative' to 'Stable'. The previous rating action for ULPL was announced on October 16, 2017.

Revision in rating incorporates erosion in risk absorption capacity on a timeline basis and weak liquidity profile given low cash flow generation. Ratings also incorporate sizeable regional competition resulting in limited pricing power and weak demand for ULPL's products. Revision in rating outlook to 'Stable' reflects some improvement in financial profile in the ongoing year through focused cost reduction, improved margins (function of rupee depreciation), reduction in outstanding borrowings and stock carried on balance sheet. Ratings remain dependent on further improvement in financial profile through achieving projected increase in sales volumes.

Topline of the company increased during FY18 on account of higher average selling prices...