PACRA Maintains the Rating of Cherat Packaging Limited

Cherat Packaging Limited (“CPL” or the “Company”) stands as a prominent industry participant, benefiting from its multi-segment packaging operations and the strategic support of the Ghulam Faruque Group. In line with industry trends, the Company has successfully transitioned from KP bags to PP bags. To remain sustainable and manage profitability, the Company has diversified its revenue base. The Company has successfully commissioned its SOS/Carrier bags unit, which forms part of the total annual bag manufacturing capacity of 510 million, with the SOS unit contributing 250 million units. This enables CPL to effectively cater to the growing demand for retail and industrial paper-based bags. Alongside this, the Flexible Packaging (FP) segment continued to build a strong market presence through improved product offerings and deeper client penetration, now contributing a major portion of the Company’s revenues. To further scale this segment, CPL is in the process of installing a barrier extrusion film plant worth PKR 1.4 billion, which will enhance FP production capabilities. Currently, the FP segment operates at around 73% capacity utilisation, and the planned expansion is expected to support future volume growth and strengthen CPL’s competitive positioning across its diversified business lines. Additionally, the Company is undertaking a 2.7 MW solar installation—expected to be completed by year-end. This transition is anticipated to significantly reduce energy costs and enhance overall operational efficiency. Collectively, these initiatives reinforce CPL’s competitive positioning and support long-term sustainable growth across its diversified portfolio. Cherat Packaging Limited has gradually optimised its procurement strategy by reducing reliance on imported inputs and increasing the use of locally sourced raw materials. While the Company continues to import resin from SABIC under a long-standing supply relationship—ensuring quality and consistency—other key inputs are procured locally. This shift supports more efficient inventory management, reduces lead-time risk, and offers better cost predictability in a volatile external environment. The Company’s established relationships with suppliers and its reputation for quality further reinforce its operational resilience and market positioning. CPL’s established client relationships and proven quality reinforce its market standing and operational resilience.
On the financial side, Cherat Packaging Limited (CPL) reported a topline of PKR 13.0 bln in FY25 (FY24: PKR 13.8 bln; 1QFY26: PKR 3.4 bln), reflecting lower volumes and pricing pressures. GP margins declined due to a shift from paper sacks to polypropylene bags, lower cement dispatches, increased competition, and higher input costs. Profit after tax (PAT) declined to PKR 356 mln (FY24: PKR 886 mln; 1QFY26: PKR 16 mln), as gross margins narrowed to 7.8% (FY24: 10.6%), respectively. Leveraging slightly increased to 27.2% (FY24: 25.6%), reflecting moderate reliance on debt to support ongoing capacity expansions, including the extrusion film plant and Carrier/SOS bags unit. Going forward, CPL aims to sustain topline growth by leveraging its diversified portfolio and ongoing operational enhancements.
The ratings are supported by CPL’s ability to maintain healthy margins, efficiently manage working capital, and sustain growth in the Flexible Packaging segment, reflecting the Company’s operational resilience and strategic initiatives.

About the Entity
Cherat Packaging Limited, incorporated in 1989, is part of the Ghulam Faruque Group and is listed on the Pakistan Stock Exchange. The ownership structure includes: Faruque (Pvt.) Ltd holds 10.25% stake in Cherat Packaging Limited, followed by Atlas Insurance Limited 9.2%, Cherat Cement Company Limited (7.35%), Greaves Pakistan Private Limited (5.02%), and Mirpurkhas Sugar Mills Limited (4.97%). The Directors/other family members hold around 16% stake of the Company, while the remaining stake is held by the general public and other financial and non-financial institutions.