VIS assigns Initial Entity Ratings to International Packaging Films (Private) Limited

Karachi, February 26, 2021 (PPI-OT): VIS Credit Rating Company Ltd. (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A minus/Single A-Two) to International Packaging Films (Private) Limited (IPAK). Outlook on the assigned ratings is ‘Positive’. Long term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short Term Rating of ‘A-2’ indicates good certainty of timely payment, sound liquidity factors supported by good fundamental protection factors and small risk factors.

Incorporated in 2015, and commencing operations in 2017, IPAK is principally engaged in the manufacturing and sale of flexible packaging materials comprising Bi-axially Oriented Polypropylene (BOPP) films. Competitive advantage stems from the five-layered plant situated in Lahore, Pakistan vis-à-vis three-layered plants of other BoPP manufacturers in the market. Given management’s focus towards value addition, IPAK has planned to expand into the manufacturing and sale of CPP Films and allied products of cast packaging segment through a wholly owned subsidiary- Cast Packaging Films (Pvt) Limited (CPFPL).

Business risk profile is considered moderate given stable demand supported by end clients belonging to the FMCG, Cosmetic and Pharmaceutical sectors and ability to pass on increase in raw material prices. Business risk profile is also supported by sizeable market share held by the company in BOPP films given oligopolistic nature of the industry with limited imports.

Assessment of financial risk profile incorporates the company’s conservative financial policy as reflected in low leveraged capital structure, healthy profitability indicators and strong liquidity profile. Revenue growth and improving gross margins on a timeline basis have been a function of increased aggregate demand and higher average selling prices along with inventory gains. Going forward, management envisages profitability to improve in the backdrop of higher projected revenue and lower fuel costs.

Liquidity profile of the company is considered strong as evident from sound cash flow coverages in relation to outstanding obligations. Capitalization levels have grown over the last three years owing to profit retention. Going forward, with improving profitability and limited additional debt drawdown, liquidity and capitalization profile is expected to further strengthen. The assigned ratings are subject to maintaining projected financial indicators within benchmarks for the assigned ratings and successful implementation of CPP project.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873

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