Analyst
Muhammad Azmat Shaheen
azmat.shaheen@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Rating of Salman Paper Products (Pvt.) Limited
Rating Type | Entity | |
Current (03-May-23 ) |
Previous (14-Sep-22 ) |
|
Action | Maintain | Initial |
Long Term | BBB | BBB |
Short Term | A2 | A2 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Salman Paper Products Private Limited ('SPPPL' or the 'Company') is involved in the business of import, sizing and trading of paper and related products from various countries. The light asset and high turnover base model of business has provided strength to the Company in establishing its brand name amongst the leading importers of paper and related products in the southern markets with an average market share of ~25% during FY22. The CEO/owner - Mr. Aslam Jilani has an extensive knowledge of business and paper industry trends with overall 30 years of experience. While the management has a well understanding of business and operational efficiencies, the governance structure is considered weak due to the absence of a formal board structure, board committees, and independent oversight. However, the external auditor is on SBP's panel of auditors and is QCR rated, providing comfort to the assigned ratings.
The financial risk profile of the Company is considered good, with sufficient cashflows and a well-managed working capital cycle. The Company has availed a non-funded facility from a financial institution to import key finished goods items. The leveraging of the Company lies at 65.7% as of FY22 (FY21: 45.2%). Revenue for the Company during FY22 stood at PKR 9,542mln (FY21: PKR 6,418mln) with net profit margin of 1.1% (FY21: 2.3%). The Company’s revenues are showing growth period on period with the increasing customer base. The Company structure is not complex making management of operations an easy and timely task with one head office and two production offices. Being part of group wherein tacit intergroup cooperation exists, bodes well to the rating.
The ratings are dependent on the Company’s ability to sustain its position amidst changing business environment and management’s ability to run the operations of the Company optimally. With the upcoming growth in firm’s business & volumes; prudent financial discipline and implementation of a stringent control environment shall remain imperative.
About
the Entity
The Company was established in 2005 as Jilani Enterprises. In 2012, Jilani Enterprises was renamed to Salman Paper Products Private Limited and got registered with SECP as on 2019 with a share capital of PKR 20mln. The Company is owned by CEO/owner Mr. Muhammad Aslam Jilani having 99% shareholding. Although Salman Paper Products deal in four main products, but it has widespread customer and supplier base. The Company imports finished goods as raw material and sells to customers after cutting and printing, selling to northern, central and southern regions of Pakistan. Four products; namely: Art card, Packaging board, Stickers and Printer paper are sold to customers divided into direct sales and dealerships - who resell to other customers. About 70% of customer base of Salman Paper Products is located in southern region with respect to geographical concentration.