PACRA Maintains Entity Ratings of Berger Paints Pakistan Limited

Berger Paints Pakistan Limited (“Berger” or “the Company”) ratings reflect its established brand equity, strong business profile, and resilient presence in Pakistan’s paint industry. The Company operates state-of-the-art manufacturing facilities equipped with modern technology to deliver high-quality products in line with local and international standards. Revenues are diversified across three segments: the Retail Business (B2C), comprising decorative paints distributed nationwide; the Non-Retail Business (B2B), including powder coatings, protective coatings, and automotive paints; and the Allied Business, covering road safety products, construction chemicals, and adhesives. In addition, Berger undertakes toll manufacturing for Buxly Paints Limited, which further strengthens its operational base and market positioning. Pakistan’s paint industry, valued at ~USD 401mln in CY24, is projected to grow at a CAGR of ~4.2% to ~USD 492mln by 2029. Growth is driven mainly by the decorative segment, supported by residential, commercial, and infrastructure activity, with additional demand expected from post-flood reconstruction. The industry is fragmented, with ~50% share held by unorganized players competing mainly on price. This is attributable to the relatively simple manufacturing process, which lowers entry barriers and enables smaller players to capture significant market share. The organized segment is led by multinational brands (AkzoNobel, Berger, Nippon) and strong local players (Master, Brighto, Diamond), represented under the Pakistan Coating Association (PCA). The sector is raw material intensive, with imported inputs (pigments, solvents, binders) comprising ~85% of COGS in FY24 (FY23: ~84%). This exposes players to exchange rate volatility and rising import costs. Industry challenges include intense price competition, macroeconomic and political uncertainty, and pressure to adopt low volatile organic compounds (VOC), eco-friendly coatings. Nevertheless, investments in local production facilities, rising urbanization, and demand for branded decorative paints are expected to support medium-term growth, while infrastructure rebuilding post-floods offers incremental opportunities. Within this landscape, Berger holds substantial competitive advantages, underpinned by superior product quality, innovative formulations, an extensive nationwide distribution network, and a loyal customer base, positioning it well to sustain its strong market presence. Reflecting these strengths, the Company recorded topline revenue of ~PKR 6,760mln (FY24: ~PKR 8,544mln), translating into an annualized growth of ~5.5%, primarily driven by a slight increase in sales volumes. Margins remained intact across all levels due to effective pricing and prudent cost control measures. The Company operates under a well-structured Board that provides oversight and strategic direction, ensuring sound governance, risk management, and alignment with long-term objectives. Operations are managed by an experienced team of professionals and supported by a robust internal control framework that underpins efficiency and accountability. The financial profile is considered adequate, with comfortable coverage and stable cash flows, although working capital remains slightly stretched. The capital structure is leveraged, funded through a mix of short- and long-term borrowings.
The ratings are dependent upon the management’s ability to sustain the market operation amidst stiff competition. Generating operating cashflows along with maintaining an efficient supply chain and prudent working capital management is important.

About the Entity
Berger Paints Pakistan Limited was incorporated in 1950 as a Private Limited Company under the Companies Act, 1913 (now Companies Act, 2017) and became a publicly listed company in 1974. It is listed on the Pakistan Stock Exchange (PSX). In 1991, Slotrapid Limited (BVI) acquired a 52.02% stake from the Company’s former parent, Jenson & Nicholson Limited, thereby assuming control. Governance rests with an eight-member Board comprising four independent, three non-executive and one executive director. The CEO, Dr. Mahmood Ahmad, a nominee of Slotrapid Limited, brings around 28 years of industry experience and is supported by a competent management team.