PACRA Adjusts Entity Ratings of MACPAC Films Limited

The assigned ratings reflect Macpac Films relatively stable position in the packaging industry and strong acumen of the sponsors. Macpac operates within the Biaxially Oriented Polypropylene (BOPP) and Cast Polypropylene (CPP) segments of the industry. The revenues of the Company have shown growth (~14% higher on YoY basis) since the new CPP line became operational. The Company's margins have declined - both at gross and operating levels - resulting in losses for FY19. The Company faces competition and rising raw material costs due to PKR devaluation but could not pass on the same immediately to customers. Improvement in margins, through better prices or cost efficiencies, is required to ensure future profitability. The Company has increased its leveraging during FY19, though it remains moderate, with certain repayments coming up. The financial profile of the Company is under duress due to stressed cash flows and weak coverages. The equity base has reduced due to losses.
The ratings are dependent on improving margins and profitability of the Company significantly. Meanwhile, strengthening equity and coverages is imperative. Sustained losses will have negative impact on the ratings.

About the Entity
Macpac Film Ltd. was incorporated as a Public Limited Company in 1993. The Company is listed on the Pakistan Stock Exchange. Macpac Films produces multiple grades of BOPP films variants at an installed capacity of 15,000 MT per annum. The Company's diverse portfolio includes multi layered CPP films variants, manufactured at an installed capacity of 6,996 MT per annum. These films have applications in confectionery: biscuits, cookies, snacks, tea and baked products packaging.

Macpac Films is primarily owned by Elahi family (51%), with major ownership residing with Mr. Maqbool Elahi (47%). Munshi family owns 15% stake in the Company. Employees Old Age Benefit holds 8% shares. Meanwhile, 27% of the shareholding resides with the General Public.