Profile
Legal Structure
Dynamic Packaging (Pvt.) Limited (‘DP’ or the 'Company’) was incorporated as a private limited company on 23rd June 2004.
Background
The Company provides flexible packaging products to customers of various industries including snacks, beverages, confectionery, pharma, etc. The main
sponsor family has utilized his skills and experience to turn Dynamic Packaging (Pvt.) Limited into a competent contender in the flexible packaging industry
Operations
Dynamic Packaging (Pvt.) Limited provides different types of Flexible Packaging, Pharmaceutical Sachet, Tropical Blister Foil, Aluminum Blister Foil, and
Cold Forming Aluminum Foil packaging to customers of various industries. The total installed capacity of the manufacturing plant in FY24 was ~12,500 MT
(FY23:~11,400 MT), while the actual production remained at ~ 8,066 MT during FY24 (FY23: ~8,010 MT). Actual capacity utilization was ~64.5% during FY24 (FY23:
~70.2%).
Ownership
Ownership Structure
Majority stake of Dynamic Packaging (Pvt.) Limited lies with Mr. Ashraf Ch who owns ~72% of the total shares. Mr. Waqas Ashraf and Ms.
Shazia Ashraf hold respectively ~20% and ~8% ownership of the Company.
Stability
The ownership structure is stable as owners have vast experience in the packaging industry while having a personal stake in the business. Mr. Ashraf Ch also
owns Global Inks & Chemicals (Pvt.) Ltd, established in 2008, the Company is providing a complete range of solvent-based ink systems for the Rotogravure &
Flexographic printing industries across Pakistan. As per management representation, Global Inks holds a market share of ~7%.
Business Acumen
The owners and directors of Dynamic Packaging (Pvt.) Limited have extensive relevant experience and insights about the packaging industry owing to
their family background. Mr. Ashraf Ch and Mr. Waqas Ashraf are involved in managing the affairs of the Company. Mr. Waqas Ashraf oversees all the Company's financial and
tax-related affairs. While Mr. Ashraf Ch is involved in managing the operational activities of the Company.
Financial Strength
Dynamic Packaging (Pvt.) Limited is a stable business entity. The Company’s sister concern Global Inks & Chemicals (Pvt.) Ltd also has a broad
portfolio of customers. This strong forward integration strengthens the customer's bond and gives a competitive edge through strong supply chain support. Mr. Ashraf Ch
has significant resources to finance the Company if the need arises. The land on which the Company’s production facilities located are is owned by the entity.
Governance
Board Structure
The Company’s Board structure primarily revolves around its sponsor family. It consists of three directors: Mr. Ashraf Ch, the Chairperson, who also serves as the executive director, Mr. Waqas Ashraf Ch, another executive director; and Ms. Shazia Ashraf, a non-executive director. The absence of independent directors and board committees decreases governance oversight.
Members’ Profile
Mr. Muhammad Ashraf Chaudhry founded the Dynamic Group in 2004 and is currently the Chairperson of Dynamic Packaging (Pvt) Ltd. He is also serving as the CEO of Global Inks & Chemicals (Pvt) Ltd. He is L.L.B by qualification and holds various certifications in the Packaging, printing & Ink industries coupled with vast experience of around 37 years in leadership positions of different business ventures of his family. Mr. Waqas Ashraf joined Dynamic Packaging (Pvt.) Limited as an executive director in September 2017. He also serves as a director at Global Inks & Chemicals (Pvt.) Ltd and as the CEO at Royal Traders Pvt Ltd. Mr. Waqas holds a business degree from Queen Mary University (UK) and has completed training periods at HBL and Deutsche Bank’s foreign branches during his studies. Since joining the Dynamic Group, he has been responsible for overseeing the finance and marketing functions of the Group Companies. Ms. Shazia Ashraf, the wife of Mr. Ashraf Chaudhry, serves as a non-executive director of the Company. She holds a Master's degree and is also a director at Global Inks & Chemicals (Pvt) Ltd.
Board Effectiveness
As a family-driven Board, there is a strong sense of cohesiveness. The Board met four times during FY24, with
the majority attending to discuss pertinent matters.
Financial Transparency
The Company’s external auditors, Qadeer and Company, Chartered Accountants have expressed an unqualified opinion on the financial
statements for FY23. The auditors have a satisfactory QCR rating from ICAP.
Management
Organizational Structure
Dynamic Packaging (Pvt.) Limited has developed a defined organizational structure keeping in mind the Company’s operational needs. The
Company has a lean organizational structure to control personnel costs while efficiently managing its operations.
Management Team
The management team comprises experienced professionals. Mr. Muhammad Ashraf Chaudhry is the Chief Executive Officer of the Company. Mr. Ahmad Yasir Ch the Chief Operating Officer has been associated with the Company since 2012. Mr. Ahmad has over 26 years of
relevant experience and also has special expertise in the packaging industry. He has been working with the Company for over 12 years. The Company’s Chief Financial Officer, Mr. Qulb-E-Abbas, had an MBA in Finance and, an LLB and has over 14 years of relevant experience. He has been working with the Company for over 12 years.
Effectiveness
The experience of the sponsors along with a professional management team has helped the Company to streamline its operations and cut down on its costs.
The production facilities have minimal wastage which is effectively managed through re-cycling and re-using in the process.
MIS
To generate MIS and operational reports, the ERP software, Tally 9 is being used. The Company is currently in the process to the implementation of SAP by
outsourcing the software development function from Hussain and Choudhry Consulting.
Control Environment
The Company has developed an effective mechanism for the identification, assessment, and reporting of all types of risk arising out of the business
operations because there is an internal audit department in place to ensure operational efficiency which operates under the direct supervision of directors.
Business Risk
Industry Dynamics
The price of the major raw material used in the making of plastic, Polyethylene Terephthalate (PET), is correlated with international oil prices. Any
volatility in the oil prices and exchange rates is, therefore, a significant source of risk for this segment. The variability in oil prices during FY24 was
mainly due to the supply chain disruptions caused by the war in the Middle East and increased raw material prices on a global level due to high
inflation and interest rate hikes. However, during FY24, oil prices decreased by ~3.0% YoY due to low demand for oil from major importers like China
due to the economic slowdown. (Source: PACRA Sector Study)
Relative Position
Dynamic Packaging (Pvt.) Limited has captured a good share of the flexible packaging and pharmaceutical packaging market. Major local players in the
flexible packaging industry include Packages Convertors, Cherat Packaging, Century Paper and Dynamic Packaging (Pvt.) Limited. The Company is also the sole manufacturer of pharmaceutical
packaging. As per management representation, the Company currently holds ~5% market share of pharmaceutical packaging, and the remaining ~95% market is held by
local importers. While in flexible packaging, the competition is tough, however, the Company retained an adequate presence and strong customer base with long association.
Revenues
The Company generates revenue from the sale of flexible packaging and pharmaceutical packaging materials in the local market. The top line of the Company
increased by 11% from ~PKR 6,321mln in FY23 to ~PKR 7,020mln in FY24.
Margins
In FY24, the gross profit margin and operating profit margin largely remained the same and reported at ~ 9.1% and ~ 6.7% respectively (FY23: ~ 9.1% and ~ 6.7%). Consequently, in FY24, the Company posted a net profit of ~PKR 241mln (FY23:
~PKR 206mln) with a net profit margin of ~ 3.3% (FY23: ~ 3.4%).
Sustainability
Dynamic Packaging (Pvt.) Limited is a stable business entity with top customers such as Pepsi Cola Intl (Pvt) Ltd, Nestle Pakistan Ltd, and, National
Foods Limited. The Company’s sister concern Global Inks & Chemicals (Pvt.) Ltd also has a broad portfolio of customers. Being the sole manufacturer of pharmaceutical packaging, there is significant potential for growth.
Financial Risk
Working capital
In FY24, the Company’s inventory days stood at ~54 days (FY23: ~51 days). Meanwhile, trade receivable days remained the same as last year at ~46 days, and trade payable days largely remained the same at ~9 days (FY23: ~8
days). Consequently, the Company’s net working capital days also largely remained the same during FY24 and stood at ~91 days (FY23: ~88 days).
Coverages
In FY24, the Company’s Free Cash Flows from Operations (FCFO) stood at ~PKR 443mln increasing from ~PKR 407mln in FY23. The FCFO/Finance cost stood at ~ 3.1x (FY23: 3.1x), this is a good coverage level for the Company. While the Company does take only short-term financing from financial institutions, the strategy is to keep the Company mainly equity-focused, thus the finance cost is planned to be on a manageable scale moving forward.
Capitalization
The Company has a low-leveraged structure, with no long-term liabilities currently at the end of FY24. Its gearing ratio has decreased from ~ 31.4% at the end of FY23 to ~ 29.9% at the end of FY24, indicating that the Company does have debt, but it is not increasing its debt ratio currently and is instead relying more on organic growth. The Company obtains short-term debt to meet the working capital requirements, Short Term Borrowings (STB) currently stands at ~PKR 989mln increasing from ~PKR 947mln at the end of FY23.
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