PACRA Maintains Entity Ratings of Meezan Plastic Industries (Pvt.) Limited

Meezan Plastic Industries (PVT) Limited (“the Company” or “MPI”) ratings reflect its adequate presence within the packaging industry. The Company specializes in manufacturing and distributing various types of BOPP / OPP (Biaxially Oriented Polypropylene) packaging materials for both edible and non-edible products MPI has its own selling outlets located in Faisalabad and Lahore, which are operated and directed by the Company. The local packaging industry is fragmented and dominated by a large unorganized segment. The product demand is high due to the usage of BOPP/OPP films in food packaging, non-food packaging, and for industrial needs, also the major drivers for this market are growth in aliment packaging, increasing need for UV light barrier films along with the growing population, urbanization, consumer consciousness, and the e-Commerce revolution. Meezan Plastic Industries (Pvt.) Limited is owned and managed by close family members, though there is room for improvement in formal succession planning. The governance structure is considered fragile due to the absence of a formal board structure, board committees, and independent oversight, furthermore, external auditors are not QCR-rated which designates a call for refinement. The Management has a good understanding of business and operational efficiencies being monitored through budgets, forecasts, and projections. The price of the company’s major raw materials is correlated to international oil prices, and therefore, volatility in oil prices and fluctuating exchange rates along with the cost-push inflation and eruptive policy rate casts significant risk on the sector growth. During FY23 the revenue of the company registered ~41% growth and stood at ~PKR 4.1bln mainly due to price inflation, and a slightly volumetric increase in sales. During the period under review, the gross margin of the Company sustained at ~9.6%, however, the net profit margin posted some dilution due to an increase in operating expenses and recorded at ~3.7% (FY22: ~4.3%). The financial risk profile of the Company is considered good, with comfortable coverages, sufficient cashflows, and adequate working capital cycle, though trade receivables days continue stretching over the years. The operations of the Company are managed through internally generated cash flows only and there is no plan to obtain short-term and long-term borrowing facilities in the future. The Company has availed a non-funded facility from a financial institution to import key raw materials.
The ratings are dependent on the Company’s ability to sustain its position amidst a changing business environment and management’s ability to run impeccably the operations of the Company. The imminent growth in the Company’s business & volumes; prudent financial discipline and implementation of a stringent control environment shall remain imperative.

About the Entity
Meezan Plastic Industries (Pvt.) Limited is a private limited company incorporated in Pakistan in June 2018 under the Companies Ordinance 1984. It is family owned and operated business with shareholding divided among 2 members, Mr. Hafiz Muhammad Atif (70%), and Mr. Yasir Amin (30%). Mr. Hafiz Muhammad Atif is the founding member and CEO of the company since its incorporation.