PACRA Maintains Entity Ratings of Pearl Petro Industry (Pvt.) Limited

Pearl Petro Industry (Pvt.) Ltd. (“Pearl Petro” or “the Company”) manufactures and sells Polypropylene bags, Polyethylene Bags (liner bags), farm house PT sheets and other plastic sheets. The Company has also set up a flexible packaging line to print and provide packaging products for large-scale corporate clients. Sponsors acumen and strong customer base, operating in textile, fertilizer, and feed industries, bodes well for the Company. Pearl Petro imports Resin from KSA, USA, UAE, Kuwait, Singapore, and Qatar; thus, exposing the Company to exchange risk. The Company operates at the capacity of 17,500 MT for the Polypropylene (PP) and 45,000MT for Polyethylene (PE). Utilization levels remain stable; however, seasonality remains pivotal. Lately, the Company has set up and commissioned Biaxially Oriented Polypropylene (BOPP) line. The management expects a considerable impact of this expansion on the Company’s overall performance, going forward. Pearl Petro generates revenue from polypropylene begs (~44%), followed by polyethylene sheets (~24%), PT poly bags (~17%) and other products (~15%). Revenue posted growth (~30%) backed by inflationary trend in prices with limited volumes trickling in. Overall margins remain low, as compared to peers, due to higher cost of business. On the financial risk front, the Company’s working capital cycle and capital structure remains adequate; while, coverages remain stretched.
The ratings drives support from sustainable revenue growth, along with improved profitability and coverages. Product diversification and related impact remains imperative for the ratings. Firm working capital management leading to improvemed liquidity remains crucial.

About the Entity
Pearl Petro Industry (Pvt.) Limited ("Pearl Petro" or "the Company") is a private limited company incorporated in 2014 under the Companies Act 2017. The Company is engaged in the manufacturing of different types of packaging materials which include polypropylene bags, polyethylene bags (liner bags), farmhouse PT sheets and other plastic sheets.
Pearl Petro is predominantly a family-owned enterprise, with Mr. Munawar Hussain Malik holding the majority stake (~72.7%). The remaining shares of the Company are owned by his daughter, Ms. Bushara Fatima Malik (~27.8%). Mr. Munawar makes all the pertinent decisions as the Chairman and CEO of the Company.