Analyst
Muhammad Atif Chaudhry
Atif.Chaudhry@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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.