Lahore, January 02, 2023 (PPI-OT): Novapack (Pvt.) Limited (“the Company” or “Novapack”) ratings reflect an emerging business profile in the industrial packaging industry. The Company manufactures and sells different types of polyethylene rolls and bags and serves a wide range of industries like food and beverages, textile, automotive, and personal care. The company has an in-house sales and marketing department headed by a team of professionals. The product demand is high due to the growing population, urbanization, and the E-Commerce revolution.
Novapack is owned and managed by close family members and they are seasoned professionals. There is room for improvements in the governance structure which currently lacks board committees and independent oversight. The Management has a well understanding of business and operational efficiencies being monitored through budgets, forecasts, and projections. During FY22 revenues depicted ~6% growth and stood at PKR 816mln, where net margins showed some dilution and recorded at ~4% (FY:21 ~6%).
As a part of the diversification strategy, the Company has started a new business segment of assembling and sale of customized/specialized LED lighting under the brand name “NOVO”. The financial risk profile of the Company is considered good, with sufficient cashflows, coverages, and an adequate working capital cycle. The operations of the Company are managed through internally generated cash flows and short-term borrowings. Capital structure is leveraged and mainly comprised of short-term borrowings. The Company has availed TERF facility for expansion in production capacity.
The ratings are dependent on the firm’s ability to sustain its position amidst changing business environment and management’s ability to run the operations of the Company optimally. With the upcoming growth in the firm’s business and volumes; prudent financial discipline and implementation of a stringent control environment shall remain imperative.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com