PACRA Maintains Entity Ratings of Packages Limited

The ratings reflect continued sustainability in the risk profile of the company. Over the years, Packages has portrayed a strong character managing well the challenges impacting the company. The sponsor's business acumen and their widespread - domestic and international - reach have always benefited the company. Packages Group has inaugurated Packages Mall, a real estate project, as part of its diversification strategy. Expected dividend income from this subsidiary and Bulleh Shah Packaging - which is now out of technical challenges - would strengthen Packages' investment portfolio. The new flow is expected to mitigate the dry down of dividends from Tetra Pak Pakistan in FY19. The JV – OmyaPack (Pvt.) Ltd - with an international player aims to provide a horizon to tap in sophisticated chemical sector. Bulleh Shah Packaging continues to progress as envisaged. The ratings draw appreciably from stable dividend stream from its sound investment portfolio along with a low leveraged capital structure.

The ratings are dependent on the company's ability to execute its envisaged strategy of growth and expansion. Herein, disciplined management of underlying business and financial risks remain critical.

About the Entity
Packages Limited, a flagship company of Ali group, was established in 1957. The company is listed in Pakistan Stock Exchange (PSX).

Packages maintains a sizeable Investment book (end-Mar17: BV: PKR 50.4bln). The diversified book comprises the following main companies: Nestle, Bulleh Shah Packaging, Packages Construction, Tri-Pack Films, and IGI Insurance. The other companies are small in size. Although Packages sold its voting stake in Tetra Pak Pakistan in 2009, it enjoys the right to 44% of the company's profits until 2018. In FY15, Packages acquired 55% share in Flexible Packages Convertors (Pty) Ltd (South Africa) that produces mono layer & co-extruded flexible packaging material. The company, Packages Lanka (79% owned subsidiary based near Colombo in Sri Lanka), is primarily engaged in production of flexible packaging materials). Joint Venture with Omya Group is progressing as envisaged. The production facility is under construction in Kasur. The restructure of the IGI Group is underway. IGI Investment Bank is merged into IGI Insurance (IGIIL) after which the demerger of the insurance division and certain investments along with corresponding liabilities into two wholly owned subsidiaries of IGIIL will take place and the remaining assets and liabilities of IGIIL will be retained by IGIIL

The ten members BoD of Packages comprises one independent, seven non-executive, and two executive directors. Diversified background and relative expertise of the members, is a key source of guidance to the management. The Managing Director, Syed Hyder Ali, has worked in the company in different capacities since 1987. He is assisted by a team of qualified and experienced professionals.