Lahore, April 08, 2019 (PPI-OT): Pakistan’s packaging industry drives demand mainly from country’s food sector, posting a growth of 10-15%. Packaging industry use variants of Polymer Resin to manufacture BOPET, BOPP and CPP films. During FY18, the packing film industry generated revenue around PKR 20bln. Major players in the packaging industry includes: Tri-Pack Films Limited, Macpac Films Limited, International Packaging Limited and Astro Films – Ismail Industries Limited.
The industry primarily operates in three segments: Biaxially Oriented Polyethylene (BOPET) Films, Biaxially Oriented Polypropylene (BOPP) Films and Cast Polypropylene (CPP) Films. All these segments are experiencing volumetric growth. Whereas, CPP film segment enjoys better margins by providing high seal ability features. In the last few years, the food packaging companies have kept a high focus on better shelf life for their packaged products creating a strong demand for CPP films in market.
The ratings reflect Macpac Films established position in the packaging film (BOPP and CPP) industry. The Company has experienced a rising top-line owing to significant demand growth of packaging material. However, increasing competition, rising raw material prices and currency devaluation has led to an overall decline in the Company’s margins. This is expected to improve, going forward, as CPP production increases. The Company has moderate leveraging and relatively weak coverages. The working capital requirements are expected to rationalize on the back of higher sales, going forward, from its current levels. The Company has strong governance framework.
The ratings are dependent on the management’s ability to strengthen the relative positioning of the Company in the industry. Improvement in business margins and, in turn, profitability remains imperative. Any deterioration in the Company’s coverages or sustained would have negative impact on the ratings.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com