PACRA Maintains Entity Ratings of Packages Limited
The ratings reflect established sound in the risk profile of the company. Over the years, Packages has portrayed a strong character managing well the challenges impacting the company. Sponsor's business acumen and their widespread - domestic and international - reach have always benefited the company. Packages has inaugurated Packages Mall – a Real Estate Project as a part of its diversification strategy. Expected dividend income emanating from the real estate business should enable Packages to replace the ending dividend stream from TetraPak - an already divested entity. The new JV – OmyaPack (Pvt.) Ltd - with an international player is progressing as envisaged. It is expected to begin commercial operations in FY18. Meanwhile, its on balance sheet business of tissues, printing and packaging are holding relative position. The ratings draw comfort from stable dividend stream from its sound investment portfolio along with a low leveraged capital structure.
The ratings are dependent on the company's ability to execute its envisaged strategy of growth and expansion.
Packages Limited, a flagship company of Ali group, was established in 1957. The company is listed on Pakistan Stock Exchange (PSX).
Packages maintains a sizeable Investment book (end-Sep17: BV: PKR 65.5bln). The diversified book comprises: Nestle, Bulleh Shah Packaging, Packages Construction, Tri-Pack Films, and IGI Insurance. The other companies are small in size. Although Packages sold its voting stake in Tetra Pak in 2009, it enjoys the right to 44% of the company's profits until 2018. Packages has 55% share in Flexible Packages Convertors (Pty) Ltd (South Africa) that produces flexible packaging material. Packages Lanka (79% owned subsidiary based in Sri Lanka), is primarily engaged in production of flexible packaging materials.
The ten members BoD of Packages comprises one independent, seven non-executive, and two executive directors. Diversified background and relative expertise of the members, is a key source of guidance to the management. The Managing Director, Syed Hyder Ali, has worked in the company in different capacities since 1987. He is assisted by a team of qualified and experienced professionals.