PACRA Maintains Entity Ratings of Packages Convertors Limited

The ratings reflect Packages Convertors Limited's ("PCL" or the "Company") strong association with its parent company, Packages Limited. PCL holds a significant market position in its key segments—Packaging (Flexible Packaging & Folding Carton) and Consumer Products (Tissue & Sanitary Napkins). The Company commands the largest market share in Tissue and Folding Carton, and an adequate share in Flexible Packaging. Production in these segments is closely tied to the demand for food products and consumer goods, leading to consistent stability in operations.
During CY24, the Company reported net sales of PKR 49.1bln, compared to PKR 49.3bln in CY23. The major contribution to sales growth came from local sales. The profit after tax of the Company declined from 5.9% in CY23 to 5.6% in CY24, mainly due to slightly lower gross margins and higher operating expenses. The Company’s customer base shows the confidence it has gained over time. The Company’s alliances with global suppliers are playing a pivotal role in maximizing efficient supply chain management. The capital structure of the Company improved in CY24, with leverage improving to 63.8% from 70.1% in CY23, primarily on account of scheduled debt repayments and a stable equity base. Continued prudent management of leverage remains imperative to the ratings. During CY24, the Company made an expansion in the fixed assets for the Folding Carton segment. The expansion is made in Karachi. The Company is actively pursuing growth initiatives and implementing new technologies to enhance its competitive edge.
The ratings depend on management's ability to improve profit margins while maintaining market share. Effective working capital management, improved leverage, strong cash flows, and adequate coverage ratios are key considerations. Successful execution of the diversification strategy to enhance margins and profitability is critical. A reduction in margins or coverage may affect the ratings.

About the Entity
In 2020, after internal restructuring, Packages Convertors has got the legal status of a public limited Company. It is a wholly owned subsidiary of Packages Limited and is principally engaged in the manufacture and sale of packaging materials and tissue products. Tariq Iqbal Khan holds the position of Chairman of the Company. Mr. Khan is a member of ICAP and has been associated with the Company for two years. The CEO of the Company Mr. Syed Hyder Ali has been associated with the Company since its inception and is also the Managing Director of Packages Limited.