The Pakistan Credit Rating Agency Limited
Press Release


Sohail Ahmed Qureshi

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings To Ultra Pack (Private) Limited

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

Ultra Pack (Pvt.) Limited (‘UPPL’ or ‘the Company’) is primarily offering industrial packaging solutions to cement industry with majority sales to its associated concern “Kohat Cement Company Limited” (having PACRA’s assigned ratings: A/A1). UPPL is engaged in the manufacturing & sale of polypropylene bags; product line includes Block Bottom AD-Star Bags, Block Bottom Open-Mouth Bags, Laminated Stitched Bags, and Woven PP Fabric. The ratings reflect Company’s emerging market position underpinned by the strong sponsor profile – ANS Capital (Pvt.) Limited. In financial period 2021, the Cement sector’s dispatches recorded splendid growth of ~21% augmented by local demand. In view of the infrastructure projects in pipeline at national level, the overall industry’s future outlook seems positive. Additionally, packaging industry is diverging towards PP bags as these are less costly compared to kraft paper bags. The price of major raw material in packaging segment is correlated to international oil prices. Volatility in oil prices and exchange rates is a source of risk as market players face difficulty to pass on impact of increased material prices, thus ultimately holding an impact on the profitability of the sector. The production of this sector is closely linked with the demand derived from cement industry. Consequently, the Company’s revenue stream is a derivative of its cement bags sales including to its associated entity. UPPL has an installed capacity of ~120mln PP bags / annum. Accordingly, it captures market share of around ~21% in PP bags distribution. The Company’s topline is a function of sales channeled through North region of Pakistan. Profit margins of UPPL are dependent on two factors: sales earnings and merchandise cost. The Company has to build strong equity base. Ownership profile of the Company is solely represented by the sponsoring family members. UPPL has executed a sound system of internal control across the organization. Financial risk profile of the Company appears adequate with modest coverages, working capital cycle and cash flows. UPPL’s capital structure is moderately leveraged; encompassed LTBs and low equity.
The ratings are dependent on the UPPL’s ability to grow its position amidst positive industry environment while improving its proceeds. Prudent management of the working capital, maintaining sufficient cash flows and coverages are imperative for the ratings. Any significant decrease in margins and coverages will impact the ratings.

About the Entity
Ultra Pack (Pvt.) Limited, incorporated in 2016, is a private limited concern principally engaged in the production & sale of PP bags. During 2017, the Company formally started its operations by installing the latest Extrusion & Bag Conversion technologies. The Company is wholly owned by ANS Capital (Pvt.) Ltd. (~100%) through sponsoring family. Mr. Ibrahim Tanseer Sheikh is the CEO of the Company. He has more than 10 years of diversified professional experience in cement and paper & packaging sectors. He is assisted by a team of qualified professionals.
Going forward, the sponsoring group is ready to setup a paper packaging plant in Faisalabad. Furthermore, in order reap benefits from current boom in cement industry, the management of ANS Capital and Kohat Cement has strategically decided for green field expansion of 7,800-10,000 TPD, near Khushab. Estimated project cost stands at ~PKR 28bln out of which ~60% will be debt financed.

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.