Starch Pack (Pvt.) Limited (‘Starch Pack’ or ‘the Company’) was incorporated as a private limited company in Jun-21 under the repealed Companies Ordinance, 1984 (now called the Companies Act, 2017).

Starch Pack is a recent venture of Packages Group (the 'Group') that holds considerable footing across the packaging value chain through Packages Limited and the financial sector through IGI Holdings. The Company is set up as a part of a backward integration vision of the packaging value chain to create synergies across the Group.

Starch Pack manufactures and sells corn-based native and modified starches and their derivatives and by-products, such as Glucose and Corn Oil. The grinding capacity of the plant is 250 tons per day. The Company reported the production capacity of its wet milling plant at ~85,000 MT, native starch dryer plant at ~30,600 MT, modified dry starch plant at ~ 8500 MT, and glucose refinery at ~ 20,400 MT. The Company's manufacturing plant is in Kasur, Punjab, while the head office is in Lahore.

Starch Pack is a wholly owned subsidiary of Packages Limited.

The Company's ownership structure is expected to remain stable as the Group is among the largest and well-established investment holdings in Pakistan.

The Sponsors hold a strong acumen in managing interests in paper and paperboard, packaging, financial institutions, education, and real estate sectors. A strong affiliation with international associations suits the Group's investment structure.

Requisite oversight and financial support from the Group ensure the Company's financial strength. The Group's consolidated assets stand at ~PKR 274bln as of 9MCY25 with an equity base of ~PKR 88bln.

Overall control of the Company vests with a nine-member Board (BoD) comprising three Executive Directors, three Non-Executive Directors, and three Independent Directors. The BoD has six nominee Directors from Packages Limited and substantial independence in decision-making.

The BoD, with a well-diversified background and relative expertise of its members, is a key source of oversight and guidance for the management. The Chairman, Mr. Imran Khalid Niazi, has been associated with the BoD since 16-Jan-23. He is a seasoned professional with technical expertise gained from multinationals. Other BoD members also carry diversified experience, thus strengthening the BoD's policy formation process.

The BoD met twice during the last quarters, with the majority attending, to discuss pertinent matters. While the minutes of the meetings are documented, there is room for improvement concerning the details and clarity of the minutes. To ensure effective governance, three committees assist the BoD, namely i) Audit Committee, ii) Human Resource and Remuneration Committee, and iii) IT Steering Committee. The Audit Committee meet on quarterly basis, while the HR & Remuneration and the IT Steering Committee's meet once a year.

Starch Pack has appointed M/s A.F. Ferguson & Co. as the Company's external auditor. The auditor has expressed an unqualified opinion on the financial reports of CY24.

The Company operates through i) EHS, ii) Administration and Security, iii) Supply chain, iv) Sales and Marketing, v) Human Resources, and vi) IT. All department Heads report to the respective Group Head, who reports to the CEO. The CEO reports to the BoD. The organizational structure is well-defined, with clear lines of responsibility. The dual reporting framework allows for an enhanced oversight framework.

Mr. Fazeel Ur Rehman heads the Company as the CEO. He has been associated with the Group for over two decades and has served as the CEO of OmyaPack. Mr. Ali Wajid, the CFO, has been associated with the Group for over a decade and has worked in many key positions in various Group companies. The management team comprises seasoned professionals, each bringing expertise in their respective fields.

The Sponsors' experience, along with a professional management team, helps the Company streamline its operations. However, anticipating the need for enhanced management efficacy, there are envisaged plans to add management-level committees in the future.

A web-based real-time ERP solution is required to generate comprehensive MIS reports covering the operations of all segments within the Company. Starch Pack has been using SAP (ERP ECC6) and its implementation partner has been Excellence Delivered (ExD). The Company has receintly transitioned to SAP S4/HANA as its primary ERP software. The Company gets ERP support from Excellence Delivered Pakistan Limited in line with the Packages Group synergy.

To ensure operational efficiency, the Group has a centralized internal audit function that reports to the BoDs Audit Committee. The Company has set up effective mechanisms for identifying, assessing, and reporting all types of risks arising from the business operations. These risks include strategic, operational, financial, or compliance risks, which may compromise achieving the Group's overall business objectives.

The food and textile industries are fast-paced. The Company’s success depends on understanding customer requirements, anticipating future trends, challenges, and opportunities, and partnering with suppliers and human capital to discover long-term and sustainable solutions for all our stakeholders. The high ination and political uncertainties impacted food ingredient demand, consumption demands, and customer base in the previous year.

The Company is in the early stage of its life cycle and facing entity-related challenges leading to operational losses while other competitors are already established. Sales primarily trickle from the Group companies only, followed by a subsequent market expansion. Thus, the Company's relative position is currently evolving.

The Company primarily generates revenue by manufacturing and selling starch variants. Out of these, Native Starch contributes ~40% of total revenue, amounting to ~PKR 2,277mln. Corn-based by-products were the second-largest contributor, making up ~20% of total revenue (~PKR 1,161mln) during 9MCY25. Oxidized Starch, Cationic Starch, and Glucose contributed ~12%, ~11%, and ~16% of revenue, respectively. During 9MCY25, the Company reported revenue of ~PKR 5,698mln, reflecting a ~140% increase compared to SPLY (9MCY24: ~PKR 2,365mln). Starch Pack maintains a well-diversified product base, hedging itself against the risk of a revenue decline in any single stream. However, going forward, the Company needs to develope a cautious strategy to manage consistency in the topline growth.

In 9MCY25, the Company posted a gross loss of ~PKR (3)mln, compared to a gross loss of ~PKR (143)mln in SPLY. However, the Company’s gross losses has reduced by ~97%, reflecting improved cost absorption resulting from a ~140% increase in sales during the period. While, the operating losses for the Company during 9MCY25 stood at ~PKR (424)mln, compared to ~PKR (377)mln in SPLY, reflected an increase of ~12%. This was mainly due to increased selling and admin expenses. At the net level, the Company booked a loss of ~PKR (1,059)mln in 9MCY25 compared to ~PKR (1,066)mln in SPLY. The Company is currently facing initial gestation operational and competitive challenges. Going forward, the Company projects to become a profitable venture by the end of 2026, both at gross and net level. Keeping economic viability under concer, adherence to the same remains pertinent. 

The Group has a well-established mark in the packaging segment. Starch Pack is striving to strengthen its footprint along with a capacity expansion that streamlines the utilization levels and conversion costs. The Company must instill flexible plans to overcome the current challenges. Moreover, continuous financial support from the Group, which includes an equity injection of ~PKR 3bln as of Dec-24, the latest equity injection of ~PKR 1.4bln as of Oct-25, and another projected equity injection of ~PKR 2bln in 2026 to cover the consistent losses, remains pivotal in sustaining the assigned ratings.

Starch Pack’s working capital requirements are a function of its inventory, trade receivables, and trade payables financed through short-term borrowings. The Company is managing its receivables on cash with a minimal inventory holding period. The Company's credit term falls within 30 days. Payment discipline is required. The acquisition of raw materials (corn grains) will be divided into 10-12 months cycles (12 months total). Except for raw material (corn), payables are cleared within 30 to 45 days. In 9MCY25, the Company’s net working capital cycle stood at 119 days, compared to 79 days in 9MCY24. The primary factor contributing to this decline was the increase in days to receive sales, which rose sharply from 1 day in 9MCY24 to 48 days in 9MCY25, while days to inventory and payables remained largely unchanged. The Company holds a stressed  borrowing cushion on its balance sheet. As the Company grows out from its initial gestation phase, working capital related challenges are expected to be streamlined.

In 9MCY25, the Company’s interest coverage ratio stood at (2.0)x, compared to (0.1)x in SPLY, primarily due to FCFO which deteriorated sharply to PKR (1,961)mln in 9MCY25, from PKR (74)mln in 9MCY24. This is mainly due to persistent losses on the net level. Going forward, coverage improvements are essential for increasing overall efficiency. 

The Company’s equity declined from ~PKR 1,246mln in 9MCY24 to ~PKR 271mln in 9MCY25. Share-capital of the Company remained stable at ~PKR 3,900mln during 9MCY25 compared to SPLY. This gathered support from an equity injection of ~PKR 3bln in Dec-24 by the parent company. The erosion of equity was primarily driven by an increase in accumulated losses [9MCY25: ~PKR 3,629mln, 9MCY24: ~PKR 1,904mln ]. Equity levels are expected to stabilize in response to the conversion of ~PKR 1bln worth of debt into equity and a recent equity injection amounting to ~PKR 1.4bln. Leverage for the Company stands at ~98% in 9MCY25 from ~86% in 9MCY24 resulting from increase (~36%) in borrowings [9MCY25: ~PKR 10,713mln , 9MCY24 : ~PKR 7,854mln]. This uptake in borrowing is driven by a ~17% increase in long-term borrowings [9MCY25: ~PKR 6,163mln, 9MCY24 ~PKR 5,267mln] and a ~47% increase in short-term borrowings [9MCY25: ~PKR 3,446mln, 9MCY24 ~PKR 2,351mln]. These were obtained to manage the CAPEX and working capital requirement of the Company, respectively. Going forward, profit generation remains crucial to prevent further equity erosion. Moreover, continuous financial support from the parent company, which includes another projected equity injection of ~PKR 2bln in 2026 to cover the consistent losses, remains important.