Pakistan Credit Rating Agency maintains Entity Ratings of Packages Limited

Lahore, July 06, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Packages Limited at ‘AA’ (Double A) and ‘A1+’ (A One Plus) respectively. These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings of Packages reflect its leading market position in packaging and tissue industry mainly emanating from its established brand, competitive pricing, and long customer relationships. However, the company has been experiencing difficulties in accumulating volumes in its emerging division, paper and paperboard, which has led to contraction in overall margins.

Financial profile, though supported by low leveraged capital, is under pressure owing to modest core cash flows, in turn, stressed coverages. Nevertheless, the ratings draw comfort from stable dividend stream from its sound investment portfolio, in addition to strong support from sponsors.

The ratings are dependent on the management’s ability to achieve optimum capacity utilization, mainly for its plant situated at Kasur, while maintaining adequate business margins. As the company’s debt repayments are soon to start, any further deterioration in debt servicing coverages, owing to cashflow weakening or accumulation of further debt, may negatively impact the ratings.

For more information, contact:
Hammad Rashid
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