PACRA Maintains Entity Ratings of Pearl Petro Industry (Pvt.) Limited

Pearl Petro Industry (Pvt.) Ltd. ('Pearl Petro' or 'the Company') manufactures and sells specialized polypropylene (PP) bags, polyethylene (PE) bags and sheets, farmhouse PT sheets, and other plastic sheets. To cater to the increased market demand, the Company expanded its operations and set up a flexible packaging line to print and provide customized packaging solutions for large-scale corporate clients. Being a family-owned venture, the sponsors' acumen and strong customer base, operating in the textile, fertilizer, and feed industries, bode well for the Company. Pearl Petro sources resin from KSA, USA, UAE, Kuwait, Singapore, and Qatar; thus, exposing the Company to exchange risk. Pearl Petro operates at a capacity of 17,500MT for PP and 45,000MT for PE. While utilization levels remain stable, seasonality plays a pivotal role in production volumes. This, along with the commissioning of the Biaxially Oriented Polypropylene (BOPP) line, has enhanced the product offerings. The Company primarily derives revenue from PP bags (~44%), followed by PE Sheets (~24%), PT Poly bags (~17%), and other products (~15%). During FY24, the Company reported a revenue growth of ~11%, mainly driven by inflationary trends in raw material costs, although volume growth remained modest. Despite the revenue uptick, overall profit margins remain subdued due to higher operational costs associated with raw material procurement and production processes. On the financial risk front, the Company maintains an adequate working capital cycle and capital structure. However, coverage ratios are currently stretched, indicating the need for ongoing attention to liquidity management and cost control measures to sustain financial stability and support future growth initiatives.
The ratings gather support from consistent revenue growth, enhanced profitability, and strengthened coverage ratios. Product diversification continues to be a pivotal factor, mitigating sector-specific risks and bolstering financial stability. Effective working capital management has led to improved liquidity, ensuring the Company can meet its short-term obligations and maintain operational efficiency.

About the Entity
Pearl Petro Industry (Pvt.) Limited (the Company), established in 1979 and incorporated in 2014 under the Companies Act, 2017, manufactures packaging materials. The Company specializes in producing polypropylene bags, polyethylene bags (liner bags), farmhouse PT sheets, and other plastic sheets.
The Company is predominantly a family-owned enterprise. Mr. Munawar Hussain Malik, the founder and CEO, holds the majority stake (~72.7%) in the Company. His elder son, Mr. M. Ahmed Malik, owns the remaining shares (~27.8%). As Chairman and CEO, Mr. Munawar oversees all major decisions and strategic directions of the Company.