Lahore, June 23, 2023 (PPI-OT): Meezan Plastic Industries (PVT) Limited (“the Company” or “MPI”) ratings reflect an emerging business profile in the packaging industry. The Company manufactures and sells different types of BOPP / OPP (Biaxially Oriented Polypropylene) packaging material for food and non-food products through company-operated sales points located in Faisalabad and Lahore. The local packaging industry is fragmented and dominated by a large unorganized segment.
The product demand is high due to the growing population, urbanization, and the e-Commerce revolution. Meezan Plastic Industries (Pvt.) Limited is owned and managed by close family members and lacks formal succession planning. The governance structure is considered weak due to the absence of a formal board structure, board committees, and independent oversight, furthermore, external auditors are not QCR rated and denote room for improvement. The Management has a well understanding of business and operational efficiencies being monitored through budgets, forecasts, and projections. The price of company’s major raw materials is correlated to international oil prices, and therefore, volatility in oil prices and fluctuating exchange rates depict significant risk. On the other import restrictions, high inflation, and policy rates slowed down the sector growth.
Despite all macroeconomic turbulence and operational challenges, the topline of the company registered ~16% growth in FY22 and stood at ~PKR 2.9bln, and margins remained sustained at levels. The company was able to pass cost escalations to the customers. The financial risk profile of the Company is considered good, with sufficient cashflows and an adequate working capital cycle. The operations of the Company are managed through internally generated cash flows and there is no plan to obtain short-term and long-term borrowing facilities in the future. The Company has availed a non-funded facility from a financial institution to import key raw materials.
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 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