PACRA maintains the entity ratings of Bulleh Shah Packaging (Pvt.) Limited

Bulleh Shah Packaging (Private) Limited's ('BSP' or 'the Company') ratings reflect its solid sponsor profile, established market position, and satisfactory financial profile. As a wholly-owned subsidiary of Packages Limited, BSP benefits from a robust governance structure, a strong control environment, and well-qualified management team. The Company specializes in the production of corrugated boxes as well as paper and boards. According to management, BSP holds around 12% of the paper and board market. Additionally, it is the only manufacturer of liquid packing boards and controls 14% of the market share in the corrugated board segment. In CY23, BSP’s production utilization of the corrugator operated at ~97% capacity, and paper and board production was reported at ~65%. To enhance productivity and increase its market share in imported paperboard, BSP has recently expanded its existing machinery through BMR. The expansion is majorly made in Karachi for corrugators resultantly the production capacity has enhanced to approximately double. On the financial front, CY23 was a challenging year for the Company. The gross margins were affected by decreased demand for certain products, driven by higher inflation and increased fuel and energy costs. As a result, the Company had to lower its product prices to accommodate its customers. During CY23, the top line of the Company has been increased by ~24% and stood at PKR 59bln (CY22: PKR 48bln). On the back of lowered sale price, the GP margins were reported at 16.6%. As a result of a large expansion in the plants and machinery of BSP and a high policy rate, the net profitability was impacted by higher finance cost. The finance cost increased to PKR 6,102mln (CY22: PKR 2,296mln). Hence, the net profitability clocked in at PKR 226mln (CY22: PKR 3,280mln). During 6MCY24, the top line stood at PKR 30bln, the finance cost was reported at PKR 4,321mln and a net loss of PKR 1,006mln was recorded. Leverage remains high due to substantial short-term and long-term borrowings used for working capital and business operations. BSP is also exploring methods to reduce its reliance on imported raw materials to improve supply chain efficiency. Looking ahead, the Company expects that increased finance costs and overheads will be mitigated by better working capital management, stronger profit margins and volumetric growth, driven by its robust customer base. Additionally, BSP manages its energy needs through a combination of biomass, gas, and WAPDA supply.
The ratings are dependent upon the management's capacity to enhance margins while maintaining its market share. Effective management of working capital, along with sustaining adequate cash flows and coverage ratios, is crucial for the ratings. A substantial decline in margins, profitability, or coverage ratios could adversely affect the ratings.

About the Entity
Bulleh Shah Packaging (Private) Limited was incorporated as a private limited company on September 16, 2005. The primary purpose of the project was the backward integration of the packaging business of Packages Limited. The majority stake of BSP lies with Packages Limited which owns ~100% of the total shares. Mr. Syed Hyder Ali is the chairman of the board and Mr. Asghar Abbas is the CEO of the Company has joined Packages Limited in 1998 and developed strategic and functional level expertise in the packaging business over the years. Mr. Asghar Abbas has been associated with the BSP since 2017 and in the CEO position since 2020.