Ultra Pack (Pvt.) Limited

CREDIT RATING REPORT | Mar-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
28-Mar-25 BBB A2 Stable Maintain -
29-Mar-24 BBB A2 Stable Maintain -
30-Mar-23 BBB A2 Stable Maintain -
30-Mar-22 BBB A2 Stable Initial -
About the Entity

Ultra Pack (Pvt.) Limited, incorporated in 2016, is a private limited concern principally engaged in the production & sale of PP bags. During 2017, the Company formally started its operations by installing the latest Extrusion & Bag Conversion technologies. The Company is wholly owned by ANS Capital (Pvt.) Ltd. (~100%) through sponsoring family. Mr. Ibrahim Tanseer Sheikh is the CEO of the Company. He has more than 10 years of diversified professional experience in cement and paper & packaging sectors. He is assisted by a team of qualified professionals. Omer Aizaz Shiekh and Faisal Atta Shiekh are serving along as the Executive Director on the Board.

Rating Rationale

Ultra Pack (Pvt.) Limited (UPPL) specializes in industrial packaging solutions, primarily catering to the cement industry. A significant portion of its sales is directed toward its affiliated entity, Kohat Cement Company Limited, which holds PACRA-assigned ratings of A+/A1. The Company specializes in manufacturing and distributing polypropylene bags, including block-bottom AD-Star bags, block-bottom open-mouth bags, laminated stitched bags, and woven PP fabric. UPPL’s market position is strengthened by the support of its principal sponsor, ANS Capital (Pvt.) Limited. As a key supplier to the cement industry, UPPL's demand is closely tied to the performance of the local cement sector. During the first eight months of FY25, total cement dispatches (domestic and export) declined by 0.5% year-over-year (YoY) to 30.4 million tons (Mt). Domestic dispatches fell from 26.06Mt in the same period last year (SPLY) to 24.5Mt. UPPL’s profitability is driven by two primary factors: sales volume and input costs. The pricing of raw materials in this segment is closely linked to fluctuations in international oil prices, exposing the company to exchange rate volatility and cost escalations. These challenges limit its ability to fully pass on rising input costs, thereby impacting overall profitability. Reflecting these trends, the company's revenue declined by ~6.4% to PKR 2.5bln, while margins contracted across all levels due to cost-push inflation and weakened product demand. However, during 1HFY25, macroeconomic indicators showed signs of improvement, and global oil prices declined by approximately 8.2%, averaging around USD 73 per barrel. This reduction in costs contributed to a recovery in margins. With an installed capacity of ~126mln PP bags per annum, UPPL's capacity utilization has remained stagnant at around ~50%. The company holds a market share of ~21% in PP bag distribution, with sales primarily concentrated in Pakistan's northern region. UPPL's assigned ratings benefit from its ownership structure, which remains exclusively within the sponsoring family. The company has also implemented a robust internal control framework across its operations. Looking ahead, UPPL is actively expanding into stitched bag production to serve the flour and rice milling industries. The company’s financial risk profile is characterized by moderate coverages, stable cash flows, and an adequate working capital cycle, while its capital structure remains moderately leveraged, primarily consisting of short-term borrowings and a modest equity base.

Key Rating Drivers

The ratings remain dependent on UPPL’s ability to sustain its market position amid a challenging industry landscape while enhancing its financial performance. Successful execution of expansion plans, prudent working capital management, and maintaining sufficient cash flows and coverage ratios will be crucial for the company's rating stability. Any significant decline in profitability and coverage metrics could impact the ratings adversely.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Ultra Pack (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Ultra Pack (Pvt.) Limited (‘Ultra Pack’ or ‘the Company’), a subsidiary of ANS Capital is a private limited entity incorporated in 2016


Background

The Company was established in 2016 to offer industrial packaging solutions to cement industry including to its associated concern “Kohat Cement Company Limited.” During 2017, the company was fully operational by using the latest Extrusion & Bag Conversion technologies. Its registered office is located in Sunder Industrial Estate, Lahore


Operations

Ultra Pack is principally engaged in the manufacturing of Polypropylene bags from plastic granules. The Company's product line includes Block Bottom ADStar Bags, Block Bottom Open Mouth Bags, Laminated Stitched Bags, & Woven PP Fabric. The Company has an installed capacity of ~126mln units per annum.


Ownership
Ownership Structure

The Company is exclusively owned by the sponsoring family through ANS Capital (Pvt.) Limited (~100%) where, the majority stake of ANS Capital resides with Mr. Nadeem Atta Sheikh (~41.87%). The other major proportion of shareholding is with Mr. Aizaz Mansoor Sheikh (~28.59%). The remaining shareholding (~29.54%) rests with other members of the family.


Stability

Ownership structure seems stable as no major change in the shareholding is expected in near future. 100% stake rests with ANS Capital (Pvt.) Limited. However, defined and streamlined shareholding pattern among family members along with formal line of succession can add strength and bring more clarity for practical purposes.


Business Acumen

The Sheikh Family (sponsors of the Company) is considered to have strong business acumen. The sponsors have been operating in Pakistan for a number of decades now and expanded its presence by venturing into different industries including cement, paper & packaging.


Financial Strength

Kohat Cement Company being the flagship entity of ANS Capital maintains strong financial profile with substantial access to capital markets. Thus, sponsors’ ability to provide support is considered high should the need arise.


Governance
Board Structure

The board consists of three members, all of whom are affiliated with the sponsoring family: CEO Mr. Ibrahim Tanseer and Executive Directors Mr. Omer Aizaz and Mr. Faisal Atta. The absence of independent directors raises concerns about potential conflicts of interest and limitations on effective oversight of management.


Members’ Profile

The board members boast extensive related industry experience, additionally serving as directors at ANS Capital and Ultra Kraft (Pvt.) Limited. CEO Mr. Ibrahim Tanseer brings over 10 years of expertise to the company.


Board Effectiveness

The lack of board committees raises concerns regarding the potential for impartial oversight and the company's adherence to good governance practices. Board members' additional director positions in the holding company exacerbate this concern.


Financial Transparency

KPMG Taseer Hadi & Co., Chartered Accountants (QCR rated firm), is the external auditor of the Company. The auditors have expressed an unqualified audit opinion on the financial statements of Ultra Pack for the year ended June 30, 2024.


Management
Organizational Structure

A well-defined organizational structure exists in the Company. The functions reporting to CEO are: 1) Accounting & Finance, 2) Administration & Security, 3) Internal Audit, 4) IT, 5) Marketing & Sales, 6) HRM, 7) Quality Assurance and 8) Compliance & QHSE. However, the functions reporting to Director Operations are: 1) Supply Chain Purchase and 2) Production


Management Team

Mr. Ibrahim Tanseer, a CA (ICAEW) with over 10 years of experience at the company, leads a team of qualified individuals with relevant industry expertise. Key members include Mr. Abdul Jabbar (GM Production) and Mr. Abdur Raheem (Marketing & Sales Manager.


Effectiveness

With the support of right personnel, the Company is building up the business strengths and increasing its foot print across different cities of Pakistan. Functions of the management are clear and defined to effectively achieve its underlying goals and objectives.


MIS

The Company is presently using Oracle based ERP solution with version R-12 having multiple operational modules to keep track of daily and monthly reports.


Control Environment

To ensure operational efficiency and appraisal of internal controls, the Company has an in-house internal audit department which implements and monitors the policies and procedures of the Company.


Business Risk
Industry Dynamics

Pakistan's packaging industry is dominated by four segments: paper, plastic, tinplate, and glass, with paper and plastic holding the largest market share. The price of major raw material in plastic segment is correlated to international oil prices. Oil prices declined steadily in CY23 from the price at end FY22. Volatility in oil prices and exchange rates is a significant source of risk ultimately holding an impact on the profitability of the sector. The Company specifically serve product packaging needs of cement industry. Therefore, Company's growth is directly related to the cement industry and the cement sector growth in FY24 was largely driven by a surge in export volumes, offsetting a decline in domestic sales to a seven-year low. It is attributed to higher cement prices, which rose significantly following an increase in Federal Excise Duty (FED) on cement announced in the FY25 budget. Cement prices escalated by PkR125-149 per bag as manufacturers passed on the higher taxes to consumers. This impacted the demand and supply of PP bags in the domestic market.


Relative Position

Ultra Pack (Pvt.) Limited manufactures & sells premium quality Polypropylene bags. In the PP bags segment, Syntronics is the largest player in the industry with an installed capacity of ~216mln units followed by Cherat Packaging with capacity of ~180mln units. In polypropylene packaging segment, Ultra Pack holds ~21.4% share in the country’s production capacity.


Revenues

Primarily, the Company derives its revenues from the manufacturing & sale of PP Bags, followed by coated fabric, laminated stitched bags, and weaved fabric.During 6MFY25, the Company’s topline stood at ~PKR 1,090 million, reflecting a decline compared to FY24 (~PKR 2,497 million). On an annual basis, the topline for FY24 closed at ~PKR 2,497 million, down from PKR 2,668 million in FY23 and PKR 2,636 million in FY22, registering a negative growth trend of -12.7% in 6MFY25 and -6.4% in FY24.


Margins

The Company’s gross profit declined to PKR 111 million in 6MFY25 (FY24: PKR 236 million), with the gross profit margin dropping to 10.1% (FY24: 9.5%, FY23: 11.2%, FY22: 10.6%) due to higher raw material costs. Similarly, operating profit fell to PKR 35 million in 6MFY25 (FY24: PKR 64 million, FY23: PKR 158 million, FY22: PKR 172 million), reducing the operating profit margin to 3.2% (FY24: 2.6%, FY23: 5.9%, FY22: 6.5%) amid rising energy and operational expenses. As a result, the net profit margin declined to 0.8% in 6MFY25 (FY24: 1.1%, FY23: 2.5%, FY22: 4.6%) due to lower profitability and higher financial costs.


Sustainability

Given the current economic climate and industry dynamics in Pakistan, the company's demand and supply are likely to face challenges. However, the potential revival of the construction sector, rising cement demand, and decreasing policy rates could positively impact revenue and profitability. Additionally, the industry faces intense competition due to price sensitivity.


Financial Risk
Working capital

Ultra Pack’s working capital needs are met through internal cash flows and borrowings. In 6MFY25, average inventory days slightly decreased to 42 days (FY24: 45 days, FY23: 46 days, FY22: 35 days), while gross working capital days remained stable at 93 days (FY24: 94 days, FY23: 83 days, FY22: 102 days). Trade receivables days increased to 50 days in 6MFY25 (FY24: 49 days, FY23: 36 days, FY22: 67 days) due to delayed recoveries. As a result, the net working capital cycle extended to 68 days (FY24: 54 days, FY23: 29 days, FY22: 65 days), increasing reliance on short-term borrowings.


Coverages

In 6MFY25, Ultra Pack’s FCFO declined to PKR 19 million (FY24: PKR 53 million, FY23: PKR 83 million, FY22: PKR 143 million) due to lower profitability and higher working capital needs. The interest coverage ratio fell to 3.5x (FY24: 2.8x, FY23: 7.3x, FY22: 10.2x) amid rising financial costs, while the core-debt coverage ratio declined to 1.1x (FY24: 1.3x, FY23: 3.3x, FY22: 6.3x) due to weaker operational cash flows.


Capitalization

Ultra Pack maintained a leveraged capital structure in 6MFY25, with a leverage ratio of ~48.5%, compared to 37.7% in FY24, 32.3% in FY23, and 45.3% in FY22. The Company’s total borrowings stood at PKR 140 million in 6MFY25, compared to PKR 255 million in FY24, PKR 118 million in FY23, and PKR 205 million in FY22, with borrowings mainly used for working capital financing.
 
 

Mar-25

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Ultra Pack (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 650 642 675 710
2. Investments 40 38 27 19
3. Related Party Exposure 0 0 47 275
4. Current Assets 823 1,072 1,021 1,056
a. Inventories 275 231 379 298
b. Trade Receivables 103 497 177 354
5. Total Assets 1,513 1,752 1,770 2,060
6. Current Liabilities 304 436 619 768
a. Trade Payables 153 140 406 382
7. Borrowings 140 255 118 205
8. Related Party Exposure 235 235 229 341
9. Non-Current Liabilities 71 71 78 86
10. Net Assets 763 755 726 659
11. Shareholders' Equity 763 755 726 659
B. INCOME STATEMENT
1. Sales 1,090 2,497 2,668 2,636
a. Cost of Good Sold (979) (2,261) (2,369) (2,357)
2. Gross Profit 111 236 300 279
a. Operating Expenses (76) (172) (142) (106)
3. Operating Profit 35 64 158 172
a. Non Operating Income or (Expense) 11 34 (23) 24
4. Profit or (Loss) before Interest and Tax 45 98 135 196
a. Total Finance Cost (22) (48) (30) (25)
b. Taxation (15) (21) (37) (49)
6. Net Income Or (Loss) 8 29 67 122
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 19 71 83 143
b. Net Cash from Operating Activities before Working Capital Changes (5) 28 51 118
c. Changes in Working Capital 193 (333) (52) 212
1. Net Cash provided by Operating Activities 188 (305) (0) 331
2. Net Cash (Used in) or Available From Investing Activities (26) 46 215 (226)
3. Net Cash (Used in) or Available From Financing Activities (115) 143 (200) (9)
4. Net Cash generated or (Used) during the period 47 (116) 15 96
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -12.7% -6.4% 1.2% 31.6%
b. Gross Profit Margin 10.1% 9.5% 11.2% 10.6%
c. Net Profit Margin 0.8% 1.1% 2.5% 4.6%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 19.5% -10.5% 1.2% 13.5%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 2.2% 3.9% 9.7% 20.4%
2. Working Capital Management
a. Gross Working Capital (Average Days) 93 94 83 102
b. Net Working Capital (Average Days) 68 54 29 65
c. Current Ratio (Current Assets / Current Liabilities) 2.7 2.5 1.7 1.4
3. Coverages
a. EBITDA / Finance Cost 3.5 3.2 7.3 10.2
b. FCFO / Finance Cost+CMLTB+Excess STB 1.1 1.8 3.3 1.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 58.4 7.7 3.9 3.7
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 32.9% 39.3% 32.3% 45.3%
b. Interest or Markup Payable (Days) 73.5 84.8 57.7 103.9
c. Entity Average Borrowing Rate 8.8% 10.3% 6.0% 4.5%

Mar-25

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Ultra Pack (Pvt.) Limited

rating scale

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Mar-25

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Ultra Pack (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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  3. Conduct of Business
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Mar-25

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