PACRA assigns Entity Ratings to Starch Pack (Pvt.) Limited

Starch Pack (Pvt.) Limited ('SPPL' or the 'Company') is the latest venture of the esteemed Packages Group (the 'Group'). The primary purpose behind the Company's establishment is backward-integration and synergy within the Group. The assigned ratings incorporate the business acumen and the strong presence of the sponsoring Group. SPPL's business objective is the manufacturing and sale of corn-based native and modified starches, along with its derivatives and by-products, such as Glucose and Corn Oil. Pakistan's corn manufacturing industry is close to 100% localized, with the space having ample growth opportunity present due to very limited competition from large players. Corn Starch serves as a vital input for three of Pakistan's largest local industries - Textile, Feed, and Paper and Packaging. The governance structure is considered strong with the presence of independent directors and board committees well noted. The Company has a lean organizational structure focused on operational efficiency. A well-qualified and experienced management team provides comfort to the ratings. The control environment is sound with group oversight present whereas requisite policies are also in place. SPPL has successfully completed the testing phase of their native starch products within the Group. The ratings take into account the stable demand of native starch from within the group and the demand base for native and modified starches within the central Punjab region. The strategic location of the Company's manufacturing facility provides easy and quick access to corn, providing supply chain economies for SPPL. The ratings include the key advantage of the Group's international presence, yielding an established footprint to the international market for SPPL. The Company's testing for the export segment shall commence by the end of CY23, whereas commercial production for both local and export segments has started during 4QCY23.
The ratings are contingent upon the continued Group synergies, materialization of local and international commercial production, and the Company's continued control over its margins. Moving forward, market penetration and SPPL's maintenance of its competitive advantages remain important. Moreover, effective management of working capital cycle and retention of key management are paramount.

About the Entity
Starch Pack (Pvt.) Limited was established as a private limited company in June, 2021. The Company is a wholly owned subsidiary of Packages Limited. The Company was incorporated as a manufacturing concern that is involved in the production and sale of corn-based starch products and its derivatives and by-products. The primary purpose of the project was the backward integration of the paper and packaging business of the Packages Group. The Company's manufacturing plant is located in Kasur, Punjab. SPPL is headed by Mr. Fazeel Ur Rehman, the CEO, who has over twenty five years of experience and has been with the Group for more than fifteen years. The Board is chaired by Mr. Imran Khalid Niazi.