PACRA Maintains Entity Rating of Starch Pack (Pvt.) Limited

Starch Pack (Pvt.) Limited ('Starch Pack' or the 'Company') is a recent venture of Packages Group (the 'Group') that holds considerable footing across the packaging value chain through Packages Limited and the financial sector through IGI Holdings. The Company is set up as a part of a backward integration vision of the packaging value chain to create synergies across the Group. Starch Pack manufactures and sells corn-based native and modified starches and their derivatives and by-products, such as Glucose and unrefined Corn Oil. Pakistan's corn sector is ~100% localized, with the space holding sufficient growth opportunities due to minimal competition from large players. The product, corn-based native and modified starch serves as a vital input for three of Pakistan's largest local industries: the textile, paper, and packaging sectors. This and stable demand from within the Group - Bulleh Shah Packaging (Pvt.) Ltd. - and the central Punjab region provides comfort to the ratings. Moreover, the strategic location of the Company's manufacturing facility provides easy and quick access to corn and gives economies of scale. The ratings include the key advantage of the Group's international presence, yielding an established footprint in the international market for Starch Pack. Currently, the Company is focusing on enhancing its sales firstly in the local market and thereafter export; this is crucial to achieve operational breakeven. To cover the gap, the parent company intends to inject equity. Requisite oversight and continuous financial support from the Group will ensure the Company achieves and maintains operational efficiency. Sponsors' strong acumen and a developed governance framework benefit the ratings. Starch Pack's lean organizational structure is expected to evolve as the Company grows from the initial gestation phase. Moreover, a well-equipped and experienced management team provides comfort. This, along with a sound control environment, adds respite.
The ratings are contingent upon the continued Group synergies, local and international commercial production materialization, and the Company's continued efforts to control business margins. Moving forward, market penetration and maintaining competitive advantage remains important. Moreover, effective management of the working capital cycle and retention of key management are paramount to the assigned ratings.

About the Entity
Starch Pack (Pvt.) Limited ('Starch Pack' or the 'Company'), incorporated as a private limited company in Jun-21, manufactures and sells corn-based starch products, derivatives and by-products. The Company is a wholly owned subsidiary of Packages Limited, with a manufacturing plant located in Kasur, Punjab. Mr. Imran Khalid Niazi chairs the Board; while, Mr. Fazeel Ur Rehman heads the Company as the CEO.