Packages Convertors Limited ("PCL" or the "Company") was incorporated in Pakistan in May 2019 as a Public Company Limited by shares under the Companies Act, 2017. The Company operates as the Group's dedicated manufacturing entity for packaging products.

Over the years, Packages Limited has continuously expanded and modernized its manufacturing capabilities to cater to the growing demand for packaging and allied products. As part of the Group's strategic restructuring in 2020, all manufacturing operations were transferred to PCL, enabling Packages Limited to primarily function as the holding Company. Since then, PCL has remained one of the Group's flagship investments and its principal manufacturing arm.

Packages Convertors Limited has established a prominent market presence in its operating segments, including Flexible Packaging, Folding Cartons, and Consumer Products (Tissue & Sanitary Napkins). The Company is notably the only local manufacturer of tissue products in Pakistan, providing it with a distinct competitive advantage in the domestic market.

PCL is a wholly owned subsidiary of Packages Limited, which holds 100% of the Company's equity.

Packages Limited is the flagship investment holding Company of the Ali Group, with a corporate legacy spanning more than seven decades. The Group maintains a diversified investment portfolio across packaging, paper and paperboard, flexible packaging, inks, corrugated boxes, BOPP and CPP films, ground calcium carbonate products, insurance, power generation, and real estate. The strong sponsor profile and diversified business footprint underpin the Company's stability.

The Group's business acumen is rooted in the vision of Syed Babar Ali, whose leadership has been instrumental in building long-standing strategic partnerships with leading international companies. Over the decades, the sponsors have demonstrated a proven ability to execute complex business ventures while maintaining high standards of corporate governance and operational excellence. The successful development and management of commercial real estate projects, catering to domestic and multinational corporate tenants, further reflects the Group's strong execution capabilities.

The Ali Group's total assets stood at approximately PKR 267bln in CY25 (CY24: PKR 248bln), while equity amounted to PKR 85.7bln (CY24: PKR 88.7bln), reflecting a strong financial profile and the capacity to provide support, if required. The Group generated a topline of approximately PKR 193bln in CY25, compared to PKR 176bln in CY24, underscoring its resilient market position and sustained revenue-generating capability.

The Board comprises six members, including two Executive Directors, one serving as the CEO, three Non-Executive Directors, one of whom represents the sponsoring shareholders, and one Independent Directors. The Board’s balanced composition and independent oversight strengthen the Company’s corporate governance framework.

The Board, with a well-diversified background and relative expertise of its members, is a key source of oversight and guidance for the management. The Chairman of the Board, Mr. Tariq Iqbal Khan, has been associated with the Company since 2020; he is a Chartered Accountant and serves on the boards of twelve other companies. The Board also includes Mr. Riyaz Ali Towfiq Chinoy, an Non-Executive Director and Managing Director of Yaqin Steels Limited with a strong engineering background; Mr. Syed Aslam Mehdi, a Non-Executive Director with long-standing involvement in Packages Group entities and foundations; Mr. Khalid Abdul Quddus, an Executive Director with expertise in packaging and films; and Mr. Zahid Hussain, an Independent Director and CEO of Rafum Retail, bringing retail and manufacturing experience to the board.

The Board has constituted three committees to strengthen oversight and support effective governance: i) the Board Audit and Risk Committee, ii) the Human Resource & Remuneration Committee, and iii) the Executive Committee. Each committee comprises three members. The committees meet regularly to oversee their respective mandates, with discussions focused on the Company's operational, financial, governance, and strategic matters.

The Company's financial statements are audited by A. F. Ferguson & Co., a member firm of the PwC network, which has served as the external auditor since the Company's inception. The auditors issued an unqualified opinion on the CY25 financial statements, reflecting compliance with applicable accounting standards and supporting the transparency and reliability of the Company's financial reporting.

The Company operates through eight departments, namely, i) Production, ii) Marketing, iii) Finance, iv) IT, v) Internal Audit, vi) EHS, vii) Supply Chain, and viii) HR. All departments are reportable to the HOD, and each HOD is reportable to the CEO, while the internal audit department is also reporting to the Board of Directors through the Audit Committee.

The Company's CEO, Mr. Syed Hyder Ali, has been associated with the Company since its inception and also serves as the Managing Director of Packages Limited. The CFO, Mr. M. Amjad Shaikh, possesses over a decade of relevant professional experience. The senior management team is further strengthened by experienced functional heads, including Mr. Salman Fazlur Rahman, Head of Supply Chain, with over 15 years of experience, and Mr. Khalid Abdul Quddus, Head of the Packaging Division, who also brings over 32 years of relevant experience.

The Company has established effective operational controls, with production wastage minimized through efficient recycling and reuse processes. Periodic management committee meetings facilitate timely decision-making, performance monitoring, and coordination across functions, supporting overall operational efficiency.

The Company has completed the implementation of SAP S/4HANA, with final optimization completed. This upgrade is expected to improve reporting efficiency and reinforce the control environment.

To ensure operational efficiency, the Internal Audit Function is in place that identifies and reports risks. The Audit Committee reviews the internal audit department reports and planned activities.

The packaging industry's cost structure remains highly dependent on imported raw materials, particularly plastic resins and chemical wood pulp, rendering profitability sensitive to movements in international commodity prices and exchange rates. Plastic resin prices are closely linked with global crude oil prices, which declined by 16.3% YoY to an average of USD 70.2/bbl in FY25 from USD 83.9/bbl in FY24, providing some relief to input costs. Consequently, PET resin import prices declined to PKR 287.1/kg from PKR 295.9/kg, while PET resin imports increased by 13.2% YoY to USD 709.6mln, reflecting improved demand. Meanwhile, imported wood pulp remains a key raw material for the paper packaging segment, with raw materials accounting for approximately 71.2% of the segment's cost of sales in FY25. Chemical wood pulp imports stood at USD 159.5mln in FY25 compared to USD 175.1mln in the preceding year. Accordingly, the industry's cost profile remains exposed to fluctuations in global commodity prices, exchange rate movements, and the availability of imported raw materials

Amongst the larger players in the tissue paper industry and packaging market, PCL enjoys the largest market share of Tissue and Folding Carton, and an adequate share in Flexible Packaging.

The Company derives the majority of its revenue from the Folding Carton and Flexible Packaging segments, with Folding Carton remaining the largest contributor. During CY25, the Company reported a stable topline of PKR 51.1bln (CY24: PKR 49.1bln), reflecting a year-on-year growth of approximately 4%, driven by its predominantly B2B customer base. Gross profit marginally declined to PKR 12.0bln (CY24: PKR 12.3bln), reflecting some pressure on margins. However, the impact was mitigated by a 33% reduction in finance costs to PKR 2.05bln (CY24: PKR 3.08bln), supported by lower interest rates and prudent debt management. Consequently, the Company reported a profit after tax of PKR 2.8bln (CY24: PKR 2.7bln). Profitability remained largely flat despite a slight increase in operating expenses.

The gross profit margin moderated to 23.5% in CY25 (CY24: 25.0%), reflecting relatively higher input and operating costs. Despite the margin compression, the Company maintained profitability through lower finance costs and prudent cost management. Consequently, the net profit margin remained broadly stable at 5.5% in CY25 (CY24: 5.6%).

The Company enjoys a well-established brand name and strong market presence. Going forward, management remains focused on technological advancements, process optimization, and operational excellence to enhance efficiency, strengthen its competitive position, and support sustainable growth.

The Company's working capital profile improved during CY25. Gross working capital days moderated to 109 days (CY24: 111 days), primarily driven by lower inventory days of 62 (CY24: 67), although receivable days increased to 47 (CY24: 43). On the other hand, trade payable days largely remained to 33 days (CY24: 32 days), resulting in net working capital days declining to 76 days (CY24: 79 days). The Company's working capital requirements are financed through a mix of equity and short-term borrowings. As at end-CY25, the Company had aggregate running finance facilities of PKR 20.55bln, of which only PKR 405mln was utilized, reflecting ample available liquidity. In addition, the Company maintains short-term finance, letter of credit, and bank guarantee facilities to support its operational and import requirements.

The Company's debt service coverage profile improved significantly during CY25, driven by a substantial decline in finance costs and stable operating performance. EBITDA / Finance Cost improved to 4.7x (CY24: 3.0x), reflecting the Company's enhanced ability to service its debt obligations from operational earnings. This improvement is primarily attributable to a ~33% reduction in total finance cost to PKR 2.05 billion (CY24: PKR 3.08 billion), supported by a decline in the average borrowing rate from 19.6% to 11.8% amid lower benchmark interest rates and prudent debt management. FCFO / Finance Cost also strengthened to 4.0x (CY24: 2.7x), indicating robust cash generation relative to interest expenses. Meanwhile, FCFO / (Finance Cost + Current Maturities of Long-Term Borrowings + Excess Short-Term Borrowings) remained stable at 1.6x (CY24: 1.6x), demonstrating consistent coverage of all near-term debt obligations.

The Company's capital structure remained leveraged; however, capitalization improved during CY25, with the leveraging ratio declining to 62.8% from 63.8% in the preceding year. Total borrowings stood at PKR 17.7bln, including short-term borrowings of PKR 7.1bln, representing around 40% of the total debt portfolio. The equity base strengthened to PKR 10.5bln from PKR 8.7bln, supported by internal capital generation despite dividend distribution. The strengthened equity base enhanced the Company's loss absorption capacity and provided modest support to its financial risk profile.