PACRA Maintains Entity Ratings of Pakistan Synthetics Limited

Pakistan Synthetics Limited ("PSL" or the "Company") ratings reflect the strong sponsor profile, satisfactory market position, and its adequate financial profile. The principal activity of the Company is the manufacturing and sale of Plastic and Crown Caps, PET resin, and PET Preform. As per management representation, Pakistan Synthetics holds a moderate market share of ~15% in the PET Resin segment. Whereas, in the Plastic Caps and Metal Crowns, the Company is a market leader with an estimated share of ~60% and ~15% in PET preform. The demand for Pakistan’s PET packaging industry is seasonal as it mostly drives its demand from the country’s beverage sector. In FY24, capacity utilization of PSL reflected mixed trends across segments—Plastic and Crown Caps operated at a relatively lower rate of ~79% (FY23: 111%), PET Resin saw improved utilization at ~95% (FY23: 80%), while PET Preform utilization declined to ~64% (FY23: 73%). The assigned rating takes into account the good governance framework, strong control environment, and qualified and experienced management team. The internal audit department is operating under the direct supervision of the directors. The Company has developed an effective mechanism for the identification, assessment, and reporting of all types of risk arising out of the business operations. The PET preform segment stood out as the top earner by contributing ~41.9% to the overall revenue in FY24. Whereas, metal crowns and plastic caps have contributed ~28.7%. Financially, the Company saw a decline in revenue during FY24 due to lower sales volume, reporting at PKR 13,799mln (FY23: PKR 14,425mln), a decrease of ~4.3%. While the profitability was impacted by rising raw material costs, exchange rate volatility, and higher finance costs, resulting in a decline in PAT to PKR 348mln (FY23: PKR 798mln). Subsequently, during 6MFY25, the Company saw a 21% increase in sales revenue driven by higher quantities sold. Consequently, the gross profit rose from PKR 843mln to PKR 975mln. However, despite a decrease in interest rates, the Company's higher utilization of short-term borrowing resulted in an increase in finance cost. Additionally the Company's investment in an associate reported a loss; these factors led to a decline in PAT to PKR 169mln (6MFY24: 216mln).
The management is proactively managing the situation to maintain existing market share in the industry while remaining competitive and keeping the profit margins intact.

About the Entity
Pakistan Synthetics Limited was incorporated as a private limited company in 1984. In 1987, the Company was converted into a public limited company and was listed on the Pakistan Stock Exchange. The Company provides complete packaging solutions through the production and sale of PET Resin at an installed capacity of 28,000MT per annum, PET Preform at an installed capacity of 52,000 Octabins per annum and Plastic Closures and Metal Crowns at an installed capacity of 558,570 cartons per annum. PSL's manufacturing facilities are located in Hub, Balochistan and Port Qasim, Karachi. The Company's registered office is located in Clifton, Karachi. PSL is primarily owned by the Yaqoob Karim family (~73%) through individual family members. Mr. Yaqoob Haji Karim (~20%) and Mr. Noman Yaqoob (~21%) arethe two largest stakeholders of the Company. Approximately 15% of the stake resides with the general public.