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The Pakistan Credit Rating Agency Limited
Press Release

Date
02-Mar-23

Analyst
Muhammad Atif Chaudhry
Atif.Chaudhry@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA assigns Entity Ratings to Poly Pack (Pvt.) Limited

Rating Type Entity
Current
(02-Mar-23 )
Action Initial
Long Term A-
Short Term A2
Outlook Stable
Rating Watch -

Poly Pack (Pvt.) Limited (“the Company”) is predominately manufacturing Poly Propylene Woven Bags. The Company is also engaged in the manufacturing of Polyethylene Plain Films, Polyethylene Shrink Film, POF Shrink Film, and Flexible Packaging. The demand for the product is derived mainly from the food industry and consumers. The strong customer base of the Company bodes well for the assigned rating. The Company is wholly owned by family members. The sponsor’s family has vast experience in packaging and engaged in this business since 1991. The raw material of the finished product is ~100% imported hence, exposed to exchange rate risk. As per management representation, the Company has captured the major share of the PP Woven Bags market and enjoys the highest market share of approximately ~9%. Almost 60% of the total sales of the Company are made in the Punjab region. The Company has expanded its capacity year by year, from ~34,600 MT/annum in FY20 to ~60,000 MT/annum tons in FY22. The Company is currently working on ~90% capacity. The internal audit department is operating under the direct supervision of directors. The Company has developed an effective mechanism for the identification, assessment, and reporting of all types of risk arising out of the business operations.
The Company has generated a topline of ~ PKR 14,252mln in FY22 as compared to ~PKR 11,994mln in FY21. In FY22, Poly Pack (Pvt.) Limited generated a bottom line of ~PKR655mln (FY21: ~PKR 526mln). Equity of the Company stood at ~PKR 2,135mln at the end of FY22(FY21: ~PKR 1,480mln). On the financial profile side, the Company is moderately leveraged with sound financial indicators as of the end of Jun’22. Past trends of equity injections show strong financial commitments of the sponsors.
The ratings are dependent upon the management’s ability to improve margins while sustaining its market share. Prudent management of the working capital, and maintaining sufficient cash flows and coverages are essential for the ratings. Any significant change in margins and coverages will impact the ratings.

About the Entity
Poly Pack (Pvt.) Limited was founded as a private limited company in 1991 and began its operations with the commercial production of Poly Propylene Bags. The Company is currently among the largest producers of plastic packaging products in Pakistan. The Company’s manufacturing plant is located near Raiwind. The Company is wholly owned by the sponsor family with major ownership of ~43.6% residing with Mr. Iftikhar Ahmed, followed by Mr. Aamir, Mr. Bilal, and Mr. Abdullah owns ~15.6% shares respectively while Mrs. Nazia Iftikhar owns ~9.4% shares.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.