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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Ahmed Sheikh
ahmed.sheikh@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Corporate Rating Methodology (Jul 17) [View]
  • Correlation between long-term and short-term rating scale (Jun 17) [View]

Related Research

Disclaimer
This press release is being
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dissemination through print/electronic
media. The press release may be used
in full or in part without changing the
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PACRA Maintains Entity Ratings of Packages Limited
 Rating Type Entity
Current
(30-Dec-2017)
Previous
(23-Jun-2017)
 Action Maintain Maintain
 Long Term AA AA
 Short Term A1+ A1+
 Outlook Stable Stable
 Rating Watch - -

The ratings reflect established sound in the risk profile of the company. Over the years, Packages has portrayed a strong character managing well the challenges impacting the company. Sponsor's business acumen and their widespread - domestic and international - reach have always benefited the company. Packages has inaugurated Packages Mall – a Real Estate Project as a part of its diversification strategy. Expected dividend income emanating from the real estate business should enable Packages to replace the ending dividend stream from TetraPak - an already divested entity. The new JV – OmyaPack (Pvt.) Ltd - with an international player is progressing as envisaged. It is expected to begin commercial operations in FY18. Meanwhile, its on balance sheet business of tissues, printing and packaging are holding relative position. The ratings draw comfort from stable dividend stream from its sound investment portfolio along with a low leveraged capital structure.

The ratings are dependent on the company's ability to execute its envisaged strategy of growth and expansion.
About the Entity
Packages Limited, a flagship company of Ali group, was established in 1957. The company is listed on Pakistan Stock Exchange (PSX).

Packages maintains a sizeable Investment book (end-Sep17: BV: PKR 65.5bln). The diversified book comprises: Nestle, Bulleh Shah Packaging, Packages Construction, Tri-Pack Films, and IGI Insurance. The other companies are small in size. Although Packages sold its voting stake in Tetra Pak in 2009, it enjoys the right to 44% of the company's profits until 2018. Packages has 55% share in Flexible Packages Convertors (Pty) Ltd (South Africa) that produces flexible packaging material. Packages Lanka (79% owned subsidiary based in Sri Lanka), is primarily engaged in production of flexible packaging materials.

The ten members BoD of Packages comprises one independent, seven non-executive, and two executive directors. Diversified background and relative expertise of the members, is a key source of guidance to the management. The Managing Director, Syed Hyder Ali, has worked in the company in different capacities since 1987. He is assisted by a team of qualified and experienced professionals.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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