The Pakistan Credit Rating Agency Limited
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Muhammad Azmat Shaheen

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PACRA Assigns Initial Entity Ratings to Pakistan Aluminium Beverage Cans Limited

Rating Type Entity
(24-Nov-22 )
Action Initial
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

Pakistan Aluminium Beverage Cans Limited ("PABC" or the "Company") is the sole producer of aluminium based beverage cans in Pakistan. The demand of aluminium cans is directly linked with consumption of beverage drinks which is always in increasing trend. The business model of PABC is that of B2B and directly supplies aluminium cans to beverage producers. High entry barrier and time for installation of production plant has provided strength to the Company to establish its brand name and capture entire market share of Pakistan along with major share of clients in Afghanistan and other countries. The CEO - Mr. Azam Sakrani has an extensive knowledge of the industry with overall 30 years of experience and the chairman - Mr. Simon Michael Gwyn Jennings has an overall 40 years of experience in global packaging industry. The governance structure is considered strong being fully compliant according to CCG guidelines, having sufficient number of board meetings and detailed minutes of meetings. Furthermore, external auditors are category-A with satisfactory QCR rating. The Company has recently increased its rated production capacity from 700mln cans to 950mln cans p.a. PABC has financed and installed on-grid solar system as well fulfilling major energy needs of the Company. Going forward, the Company is planning to enhance its rated capacity to 1,200mln cans p.a. by Jul'23 and improve market share for aluminium beverage cans in Pakistan and abroad by adding leading brands to its clientele.
The financial risk profile of the Company is considered strong, with sufficient cashflows and a well-managed working capital cycle. The Company has availed both short-term and long-term facilities from financial institutions to import aluminium-based raw material. The leveraging of the Company amounts to ~48% as on Jun'22. Revenue for the Company during 1HCY22 stood at PKR 6.5bln (1HCY21: PKR 3.8bln) with 32% of revenue being generated from international clients and the net profit margin of 24.2% (1HCY21: 20.9%). The Company’s revenues have shown periodic growth with 80% in last six months, enhancing customer base. MIS systems adopted are SAP business one module. Being part of well-established and stable Liberty Group and Soorty Enterprises after recent listing bodes well to the rating.
The ratings are dependent on the Company’s ability to sustain its market position 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
PABC, established in 2014 as a joint venture of Ashmore Mauritius PABC Limited and Liberty Group, started its commercial production in 2017 and eventually became a Public Listed Company in 2021 with divestment of Ashmore's shares. The current shareholding of PABC stands with 54% being held by representatives of Liberty Group and 20% by the Soorty Enterprises. PABC has inhouse technical expertise as well as contracts with international technical experts. The Company enjoys 10-year tax holiday from the start of its commercial production, under Special Economic Zones Act, 2012 and has following certifications: ISO 9001, 2015 QMS, FSSC 22000 (V5.1) Food Safety and PFA License. PABC has recently received Halal certification as well.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.