The Pakistan Credit Rating Agency Limited
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Muhammad Azmat Shaheen

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PACRA Assigns Initial Entity Ratings to Salman Paper Products Private Limited

Rating Type Entity
(14-Sep-22 )
Action Initial
Long Term BBB
Short Term A2
Outlook Stable
Rating Watch -

Salman Paper Products Private Limited ('SPPPL' or 'The Company') has been established in 2005. The Company is involved in the business of imports, sizing and trading of paper and related products from various countries. The light asset and high turnover base model of business has provided strength to the Company to establish its brand name amongst the leading importers of paper and related products in the south market. The average market share of the Company stood at ~25% during FY22. The CEO/owner - Mr. Aslam Jilani has an extensive knowledge of industry trends and Paper business with overall 30 years of experience. While the Management has a well understanding of business and operational efficiencies. The governance structure is considered weak due to the absence of a formal board structure, board committees, and independent oversight, furthermore external auditors are not QCR rated and denote room for improvement. Going forward, the Company is planning to improve the transparency by appointing QCR rated auditors.
The financial risk profile of the Company is considered good, with sufficient cashflows and a well-managed working capital cycle. The Company has availed a non-funded facility from a financial institution to import key finished goods items. The leveraging of the Company lies on the lower side providing a cushion to the assigned ratings. Revenue for the Company during 9MFY22 stood at PKR 7bln (FY21: PKR 6.4bln) with net profit margin of 2.5% (FY21: 2.3%). The Company’s revenues are showing growth period on period with the increasing customer base. The Company structure is not complex making management of operations an easy and timely task with one head office and two production offices. MIS systems are missing due to simpler organization structure. Being part of group wherein tacit intergroup cooperation exists, bodes well to the rating.
The ratings are dependent on the Company’s ability to sustain its position amidst changing business environment and management’s ability to run the operations of the Company optimally. With the upcoming growth in firm’s business & volumes; prudent financial discipline and implementation of a stringent control environment shall remain imperative.

About the Entity
The Company was established in 2005 as Jilani Enterprises. In 2012, Jilani Enterprises was renamed to Salman Paper Products Private Limited and got registered with SECP as on 2019 with a share capital of PKR 20mln. The Company is owned by CEO/owner Mr. Muhammad Aslam Jilani having 99% shareholding. Although Salman Paper Products deal in four main products, but it has widespread customer and supplier base. The Company imports finished goods as raw material and sells to customers after cutting and printing, selling to northern, central and southern regions of Pakistan. Four products; namely: Art card, Packaging board, Stickers and Printer paper are sold to customers divided into direct sales and dealers - who resell to other customers. About 70% of customer base of Salman Paper Products is located in southern region with respect to geographical concentration.

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.