PACRA Maintains Entity Ratings of Berger Paints Pakistan Limited

Berger Paints Pakistan Limited (‘Berger’ or ‘the Company’) ratings reflect a reputable brand name, strong business profile and sturdy presence in the paint industry of Pakistan. The Company operates state-of-the-art manufacturing plants and it is equipped with modern technology to produce high-quality paints and coatings efficiently, adhering to both local and international standards. Berger’s diversified revenue streams span three main segments: (i) Retail business (B2C) which includes sales of decorative paints through distributors ii) Non-retail business (B2B) which includes powder coating, protective coating, and automotive paint including undercoats and top coats iii) Allied business which includes road safety coatings, construction chemicals, and adhesive. The paint industry in Pakistan is poised for steady growth, with market size expected to rise from USD 400.82mln in 2024 to ~ USD 491.90mln by 2029, reflecting a CAGR of 4.18%. This growth is primarily driven by the architectural coatings segment, supported by increasing residential and commercial construction activities. The paint industry continues to grapple with intense price competition and encounters significant challenges stemming from the prevalence of predominately unorganized players. However, Berger has substantial competitive advantages, including superior product quality, innovative formulations, an extensive nationwide distribution network, and a steadfast/loyal customer base. Aligned with these trends, during 9MFY24 company recorded a topline of ~PKR 6,370mln (FY23: ~PKR 7,341mln) reflecting a growth of ~15.7% mainly due to increase in prices while volumes showed dilution. However, margins sustained at all levels due to better pricing and cost control. The company operates under a well-structured board that provides oversight and strategic direction, ensuring effective governance, risk management, and alignment with long-term objectives. Its operations are managed by a qualified team of professionals, supported by a robust system of internal controls implemented across the organization to maintain efficiency and accountability. The financial profile of the Company is considered strong with comfortable coverages, cashflows, and working capital cycle. Capital structure is leveraged comprising a mix of short-term and long-term.
The ratings are dependent upon the management’s ability to sustain the market operation amidst fierce competition. Generating operating cashflows along with maintaining an efficient supply chain and prudent working capital management is important.

About the Entity
Berger Paints Pakistan Limited was initially incorporated in 1950 as a Private Limited Company under the repealed Companies Act 1913 (now Companies Act, 2017). It was subsequently converted into a publicly listed company in 1974. It is currently listed PSX. In 1991, Slotrapid Limited, a company incorporated in the British Virgin Islands, acquired control of Berger Paints Pakistan by purchasing 52.02% shares from its former parent, Jenson & Nicholson Limited. The control of the Company vests with the board of directors, which comprises 8 members including Dr. Mahmood Ahmad (CEO). There are 4 independent directors and 3 non-executive directors. Dr. Mahmood Ahmad, a nominee of Slotrapid limited, has ~27 years of experience and is well-versed in industry dynamics. He is ably supported by a professional management team.