PACRA Maintains Entity Ratings of Fatima Packaging Limited

The ratings reflect Fatima Packaging Limited's (FPL or "the Company") established market position as a manufacturer of polypropylene & Polyethylene-based packaging solutions in Pakistan. The Company operates as a subsidiary of Fatima Fertilizer Company Limited (FFCL) and maintains a close business association with the Fatima Group. FPL operates a manufacturing facility equipped to produce a diversified range of packaging products serving multiple industrial sectors, including fertilizer, cement, rice, sugar, wheat, and chemicals etc. The Company's product portfolio encompasses woven polypropylene (WPP) bags, coated block-bottom cement bags, High-Density Polyethylene (HDPE) liners, and flexible laminates. In addition, FPL has expanded into Biaxially Oriented Polypropylene (BOPP) bags and Jumbo/Sling Bags, value-added extensions of the traditional WPP segment, which are expected to broaden the Company's export potential and widen its addressable industrial market. FPL has established supply arrangements with leading international raw material suppliers, providing the Company with procurement stability and a competitive advantage through preferred supply terms. The domestic packaging industry operates in a fragmented, competitive landscape with significant dependence on imported petrochemical derivatives, including polypropylene (PP), polyethylene (PE), HDPE, and LDPE, exposing manufacturers to global commodity price volatility and exchange rate risk. During CY25, relatively subdued global crude oil prices translated into softer raw material and selling prices domestically, providing some margin relief. However, escalating geopolitical tensions post-December 2025 have since driven crude oil and linked derivative prices higher, compounded by supply disruptions and elevated freight costs, pressuring input economics into CY26. Structural challenges persist, including rising energy costs and uneven automation levels across the sector. On the macroeconomic front, CY25 was marked by exchange rate stability, declining inflation, and easing interest rates; however, early CY26 has seen a modest reversal, with inflation edging upward and policy rates increased by 100 basis points. Demand fundamentals remain anchored to agricultural output, FMCG consumption, and construction activity. In line with prevailing industry dynamics, the Company reported a marginal decline in sales revenue during CY25, primarily reflecting softer market pricing, while sales volumes registered a modest increase. Profitability metrics experienced slight compression, with both gross and operating margins moderating amid pricing pressures and evolving raw material cost trends. The performance trajectory remains broadly consistent with sector-wide developments and does not indicate any underlying deterioration in the Company's operational competitiveness or market position. As a subsidiary of FFCL, FPL benefits from shared resources, strategic oversight, and the robust internal control environment established at the group level. The Company's governance framework is anchored by an experienced Board of Directors and supported by a competent professional management team, collectively fostering accountability, operational efficiency, and sound decision-making. The Company's financial risk profile is assessed as strong, underpinned by a comfortable debt coverage matrix, healthy cash flow generation, and an efficient working capital cycle. The capital structure remains moderately leveraged, with short-term borrowings constituting the primary funding source for working capital requirements.
The ratings are dependent on the Company’s ability to maintain sustainable growth in revenues, while enhancing cost efficiencies and improving margins. Furthermore, adherence to the debt and profitability matrix as depicted in shared financial projections shall remain imperative.

About the Entity
Fatima Packaging Limited was incorporated in 2011. The Company operates as a joint venture between the Arif Habib Group and Fatima Group. The Board comprises four executive directors. Mr. Abbas Mukhtar is the Chief Executive Officer of the Company. He also serves on the board of other Fatima Group companies, and Mr. Muhammad Kashif Habib also serves on the Board, contributing strategically in commercial and financial matters.