PACRA Maintains Entity Ratings of Saigal Packages Industries Limited

Saigal Packages Industries Limited’s (“SPI” or “the Company”) ratings reflect an emerging business profile in the industrial packaging industry. The Company is engaged in the manufacturing and sales of flexible packaging solutions offering a range of products, including plastic packaging and tin containers for food items, and provides comprehensive packaging design and printing services. SPI’s client base includes prominent and reputable names across various industries, showcasing its adequate market presence and credibility, but it faces concentration risk with a few customers contributing a significant portion of its revenue. The local packaging industry operates in a fragmented landscape and is highly dependent on imported polypropylene and polyethylene resin, making it sensitive to adverse exchange rate movements and global crude oil price trends. Rising energy costs and varying levels of automation and quality standards among manufacturers also influence the overall sector performance. Moreover, the demand side of the packaging sector is closely tied to consumption trends within the fast-moving consumer goods (FMCG) segment, particularly the edible oil and food industries, which directly drive the need for flexible packaging solutions such as plastic pouches, lamination rolls, and tin containers manufactured by SPI. Looking ahead, the packaging sector is expected to benefit from improvements in key macroeconomic indicators, including exchange rate stabilization and a gradual reduction in policy and interest rates. These developments are likely to support industry growth and enhance business sentiment. During 9MFY25, SPI recorded net sales of ~PKR 3,227mln, reflecting an annualized growth of ~17.5% compared to ~PKR 3,661mln in FY24. Margins also improved at all levels, supported by increased sale volumes and better cost control measures. The Company maintains a closely held ownership structure, with management led by family members. The second generation is now actively involved in the business, contributing to operational continuity and strategic oversight. However, there remains room for improvement in the overall governance framework, as the Company currently lacks formal board committees and independent oversight. Additionally, the external auditors are only QCR-rated. While the management demonstrates an adequate understanding of business operations and monitors performance through budgets and forecasts, the establishment of an internal audit function would further strengthen the internal control environment. Moving forward, the Company is actively pursuing capacity expansion in the plastic packaging segment, with plans to finance these initiatives through internally generated cash flows, as outlined in its business plan. The financial risk profile of the Company is supported by adequate coverage ratios, working capital cycle and stable cash flows. SPI maintains a low-leveraged capital structure, relying primarily on long-term borrowings obtained for capital expenditure, while day-to-day working capital requirements are managed through internally generated cash flows.
The ratings are dependent on SPI's ability to maintain its position in its specific business niches and sustain growth in the face of challenging industry dynamics. Essential factors include bolstering share capital, achieving consistent revenue growth, and margins, with improvement in governance framework, and maintaining prudent financial performance in-line with projections.

About the Entity
Saigal Packages Industries (Pvt.) Ltd is a private limited company established in 2007. CEO, Mr. Tauseef Ahmad owns the majority of the Company, with 99.34% of the shares. The remaining shares are split equally between his son, Mr. Ahsan Tauseef, and his wife, Mrs. Amna Tauseef. The sponsors also own AJ Containers, which manufactures adhesive tapes, and are supported by a team of professionals.