Lahore, June 17, 2021 (PPI-OT):The ratings reflect Packages Ltd.’s (‘Packages’ or ‘the Company’) holding company character and robust profile built over the years as the flagship Company of Ali Group. The sponsor’s business acumen and strong connections have remained beneficial. Post internal restructuring, the manufacturing business has been transferred to Packages Convertors Ltd., a wholly owned subsidiary, thus enabling Packages to act purely as a holding company. Packages holds a sizable investment book ~ PKR 43bln (as at Mar-21), comprising core, strategic and non-strategic investments.

Packages Convertors has prominent market presence in its operational segments – Packaging (Flexible Packaging and Folding Cartons) and Consumer Products (Tissue). Bulleh Shah Packaging has generated significant dividends for the first time. Packages Mall, a real estate venture, is operating as envisioned. However, it had to waive off rents due to Covid-19 and this challenge continues. OmyaPack (Pvt.) Ltd, a JV with an international player for calcium carbonate, is still evolving. Lately, the Board has approved to increase stake in Tri-Pack Films Ltd. by 19.3%. Moreover, the Board approved the formation of a wholly owned subsidiary with the primary business to manufacture and distribute corn-based starch.

Topline of the Company has improved supported by dividend income emanating from Bulleh Shah Packaging. This along with lower finance costs, after transfer of liabilities to Packages Convertors, post sizable profits. This is expected to remain stable as envisaged dividend flow from core investments are being realized.

In the wake of pandemic, Packages and its investments have been marginally impacted, operating in the FMCG sector. The management is confident to hold its market share and improve its performance, going forward. Post internal restructuring, low leveraging and strong coverages provide comfort. The ratings are dependent upon building sustainable dividend stream from maturing investments. Maintaining low leveraged capital structure and strong coverages remain critical.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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