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The Pakistan Credit Rating Agency Limited
Press Release

Date
16-Jun-21

Analyst
Shayan Farooq
shayan.farooq@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Packages Limited

Rating Type Entity
Current
(16-Jun-21)
Previous
(17-Jun-20)
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect Packages Ltd.'s (‘Packages’ or ‘the Company’) holding company character and robust profile built over the years as the flagship Company of Ali Group. The sponsor's business acumen and strong connections have remained beneficial. Post internal restructuring, the manufacturing business has been transferred to Packages Convertors Ltd., a wholly owned subsidiary, thus enabling Packages to act purely as a holding company. Packages holds a sizable investment book ~ PKR 43bln (as at Mar-21), comprising core, strategic and non-strategic investments. Packages Convertors has prominent market presence in its operational segments - Packaging (Flexible Packaging & Folding Cartons) and Consumer Products (Tissue). Bulleh Shah Packaging has generated significant dividends for the first time. Packages Mall, a real estate venture, is operating as envisioned. However, it had to waive off rents due to Covid-19 and this challenge continues. OmyaPack (Pvt.) Ltd, a JV with an international player for calcium carbonate, is still evolving. Lately, the Board has approved to increase stake in Tri-Pack Films Ltd. by 19.3%. Moreover, the Board approved the formation of a wholly owned subsidiary with the primary business to manufacture and distribute corn-based starch.
Topline of the Company has improved supported by dividend income emanating from Bulleh Shah Packaging. This along with lower finance costs, after transfer of liabilities to Packages Convertors, post sizable profits. This is expected to remain stable as envisaged dividend flow from core investments are being realized.
In the wake of pandemic, Packages and its investments have been marginally impacted, operating in the FMCG sector. The management is confident to hold its market share and improve its performance, going forward. Post internal restructuring, low leveraging and strong coverages provide comfort.
The ratings are dependent upon building sustainable dividend stream from maturing investments. Maintaining low leveraged capital structure and strong coverages remain critical.

About the Entity
Packages Ltd. was established in 1957 as a Joint Venture between Ali Group of Pakistan and Akerlund & Rausing of Sweden, to convert paper and paperboard into packaging for consumer industry. It started commercial production of tissue paper in 1982. Packages is listed on the PSX since 1965. Post internal restructuring in CY20, the Company is now classified as an investment holding company. Over the years, the Company has continued to enhance its investment book to meet the growing demand in the FMCG sector.
Ali Group holds 46.5% shares of the Company through Directors and individual family members and its corporates, with IGI Holdings Ltd. owning the prime share. Financial institutions and Modarabas own 10% and 9% stakes, respectively. While, 29% shares are held by the general public. Syed Babar Ali provides guidance while, Mr. Syed Hyder Ali heads the Company as its CEO. He is supported by a team of experienced professionals.

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.