PACRA maintains the entity ratings of Poly Pack (Pvt.) Limited

Poly Pack (Pvt.) Limited (“the Company”) is predominately manufacturing Poly Propylene Woven Bags. The Company is also engaged in the manufacturing of Polyethylene Plain Films, Polyethylene Shrink Film, POF Shrink Film, and Flexible Packaging. The demand for the product is derived mainly from the food industry and consumers. The strong customer base of the Company bodes well for the assigned rating. The industry-wise volumetric decrease in sales has been reported but the selling prices have absorbed the impact to much extent. The reduced demand for products has led to a decline in actual plant production. The plant has the capacity to produce ~60,000 MT/annum annually, but its utilization capacity dropped to ~60% in FY23, from ~92% in FY22 (FY21: ~74%). The Company is wholly owned by family members. The sponsor’s family has vast experience in packaging and engaged in this business since 1991. The raw material of the finished product is ~100% imported hence, exposed to exchange rate risk. As per management representation, the Company has captured the major share of the PP Woven Bags market and enjoys the highest market share of approximately ~9%. Almost 60% of the total sales of the Company are made in the Punjab region. The internal audit department is operating under the direct supervision of directors. The Company has developed an effective mechanism for the identification, assessment, and reporting of all types of risk arising out of the business operations.
On the financial profile side, the company's revenue hasn't experienced substantial growth. In FY23, Poly Pack (Pvt.) Limited achieved a topline of PKR 15,077mln, marking a modest increase of about ~5.8% compared to PKR 14,252mln in FY22 (FY21: PKR 11,994mln). Furthermore, the Company faced challenges with rising raw material costs due to inflation and exchange rate fluctuations but successfully managed to improve its profit margins. In FY23, the company experienced an improvement in its financial performance. The gross profit margin rose from ~6.0% in FY22 to ~8.5% in FY23. This increase contributed to a rise in the net profit margin from ~4.3% to ~5.1% during the same period, despite facing significantly higher finance costs. As a result of these improvements, the company achieved a bottom line of ~PKR 771mln in FY23, compared to ~PKR 609mln in FY22 (FY21: ~PKR 523mln). The product demand is expected to come full circle once the macro-level fundamentals improve. The Company is low leveraged with sound financial indicators as of the end of Jun’23. Past trends of equity injections show strong financial commitments of the sponsors.
The ratings are dependent upon the management’s ability to improve margins while sustaining itsmarket share. Prudent management of the working capital, and maintaining sufficient cash flowsand coverages are essential for the ratings. Any significant change in margins and coverages willimpact the ratings.

About the Entity
Poly Pack (Pvt.) Limited was founded as a private limited company in 1991 and began itsoperations with the commercial production of Poly Propylene Bags. The Company is currentlyamong the largest producers of plastic packaging products in Pakistan. The Company’smanufacturing plant is located near Raiwind. The Company is wholly owned by the sponsor familywith major ownership of ~43.6% residing with Mr. Iftikhar Ahmed, followed by Mr. Aamir, Mr.Bilal, and Mr. Abdullah owns ~15.6% shares respectively while Mrs. Nazia Iftikhar owns ~9.4%shares.