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The Pakistan Credit Rating Agency Limited
Press Release

Date
17-Jan-25

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

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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 Maintains Entity Rating of Dynamic Packaging (Pvt.) Limited

Rating Type Entity
Current
(17-Jan-25 )
Previous
(17-Jan-24 )
Action Maintain Maintain
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Dynamic Packaging (Pvt.) Limited (‘DP’ or the ‘Company’) is predominately manufacturing different types of Flexible Packaging, Pharmaceutical Sachet, Tropical Blister Foil, Aluminum Blister Foil, and Cold Forming Aluminum Foil packaging. The Group's businesses include i) Dynamic Packaging (Pvt.) Limited ii) Global Inks & Chemicals (Pvt.) Ltd iii) Royal Traders. The Company is backward integrated wherein, Global Inks & Chemicals (Pvt.) Ltd provides a complete range of solvent-based ink systems for the Rotogravure and flexographic printing industries across Pakistan. The demand for packaging products is mainly derived from the food and pharmaceutical industry. The strong customer base of the Company bodes well for the assigned rating. The sponsor’s family has vast experience in packaging and has been engaged in this business since 2004. The raw material of the finished product is ~100% imported hence, exposed to exchange rate risk. As per management representation, the Company has captured a good share of the flexible packaging market. While being the sole manufacturer of pharmaceutical packaging in Pakistan, the Company holds ~ 5% market share, the rest of the market of ~95% is captured by importers. In FY24, the capacity utilization for flexible packaging was approximately 82.7%, while for pharmaceutical packaging, it was around 28.5%. While growth in the pharmaceutical sector is expected to drive an increase in capacity utilization, it remains on the lower side due to the six-month lead time required for product testing and viability assessments by customers, which also helps establish a sustainable customer base.
In FY24, Dynamic Packaging generated a topline of ~ PKR 7,020mln (FY23: ~PKR 6,321mln) and bottom line of ~PKR 241 (FY23: ~PKR 206mln). Equity stood at ~PKR 2,315mln at the end of FY24 (FY23: ~PKR 2,074mln). The Company is low leveraged with strong financial indicators as of the end of Jun’24. Additionally, the Company has planned to install a solar energy system with a total capacity of approximately 1.6 MW in three phases. The first phase is currently underway and involves the installation of 522 KVA of solar panels at the factory, expected to be completed by March 2025. The second and third phases, each with a capacity of 500 KVA, will be implemented, with the entire installation expected to be finished by the end of this financial year. Once fully operational, this solar initiative will significantly reduce the Company’s reliance on WAPDA electricity, powering the entire factory and machinery through solar energy.
The ratings are dependent upon the management’s ability to improve margins while sustaining its market share. Prudent management of the working capital and sufficient cash flows and coverages are essential for the ratings. Any significant change in margins and coverages will impact the ratings.

About the Entity
Dynamic Packaging (Pvt.) Limited was founded as a private limited company on 23rd June 2004 and is currently engaged in the commercial production of Flexible and Pharmaceutical Packaging. The Company’s manufacturing plant is located in Raj Industrial Park Dullu Kalan. The Company is wholly owned by the sponsor family with major ownership of ~72% residing with Mr. Ashraf Ch, followed by Mr. Waqas Ashraf and Ms. Shazia Ashraf hold respectively ~20% and ~8% ownership of the Company.

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.