MIRA
INFORM REPORT
|
Report Date : |
15.09.2008 |
IDENTIFICATION
DETAILS
|
Name : |
PACKAGES LIMITED
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Registered Office : |
4th Floor, The Forum, Suite No. 416-422, G-20, Block 9,
Khayaban-e-Jami, Clifton, Karachi |
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Country : |
Pakistan |
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Financial (as on): |
31.12.2007 |
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Date of Incorporation : |
1956 |
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Com. Reg. No.: |
0000792 |
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Legal Form : |
Limited Liability Company |
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Line of Business : |
Manufacture and Sale of Paper, Paperboard, Packaging Materials and
Tissue Products |
RATING &
COMMENTS
|
MIRA’s Rating : |
A |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
Business Name
PACKAGES LIMITED
Full Address
|
Registered
Address |
|
4th Floor, The Forum, Suite No. 416-422, G-20, Block 9,
Khayaban-e-Jami, Clifton, Karachi, Pakistan |
|
Tel |
92 (21) 5874047, 5874048, 5874049 |
|
Fax |
92 (21) 5860251 |
|
Website |
Head Office
|
Address |
Shahrah-e-Roomi P.O. Amer Sidhu, Lahore, Pakistan. |
|
Tel # |
92 (42) 5811541, 46, 5811191, 94 |
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Fax # |
92 (42) 5811195, 5820147 |
Factory Location
|
Address |
Plot No. 6 &
6/1, Sector 28, Korangi Industrial Area, Karachi, Pakistan |
|
Tel
# |
92 (21) 5045320,
5045310 |
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Fax
# |
92 (21) 5045330 |
Short Description Of Business
|
Nature of Business |
Engaged in the manufacture & sale of
paper, paperboard, packaging materials and tissue products. |
|
Year Established |
1956 |
|
Registration # |
0000792 |
Auditors
A.F. Ferguson & Co.
(Chartered
Accountants)
Legal Status
The Company is a limited liability company incorporated in Pakistan and
is listed on Karachi, Lahore & Islamabad Stock Exchanges.
Details of Management
|
Names |
Designation |
|
Mr. Asadullah Khawaja Mr. Syed Hyder Ali Mr. Kamal Afsar Mr. Khalid Yacob Mr. Kirsten Rausing Mr. Markku Juha Pentikainen Mr. Mujeeb Rashid Mr. Shamim Ahmad Khan Mr. Syed Shahid Ali Mr. Tariq Iqbal Khan |
Chairman Chief Executive Director Director Director Director Director Director Director Director |
Categories of Share Holders
|
Categories |
Percentage (%) |
|
Associated Companies, Undertakings and Related Parties NIT & ICP Directors, CEO and their Spouses Executives Public Sector Companies and Corporations Banks, Development Finance Institutions, Non-Banking Finance
Institutions, Insurance Companies, Modaraba and Mutual Funds Others Individuals |
32.10 10.81 4.06 6.37 5.67 16.91 9.77 14.31 |
Associates
Subsidiary
(1) Coates Lorilleux Pakistan Limited, Pakistan.
(2) Packages Lanka (Private) Limited, Pakistan.
Associated Companies
(1) International General Insurance Co. of Pakistan Limited, Pakistan.
(2) Treet Corporation Limited, Pakistan.
(3) Loads limited, Pakistan.
(4) Treet Packages Limited, Pakistan.
(5) Orient Match Company Limited, Pakistan.
Products
Principally engaged in the manufacture and sale of paper, paperboard, packaging materials and tissue products.
Number of Employees
3,115
Capacity & Production
Capacity Actual Production
------------------------ ----------------------------
2005
2004 2005 2004
Paper and paperboard produced-tonnes
111,300 107,300 104,542
91,421
Paper and paperboard converted-tonnes
94,000 89,000 85,219
71,882
Plastics all sorts converted - tones 8,000 7,500 7,350 6,732
Inks produced - tonnes 3,765 3,075
2,985 2,489
Flexible packaging material-meter‘000’ 54,000
54,000 28,557 25,498
Note:
The variance of actual production from capacity is on
account of the product mix.
Annual Sales Volume
|
Year |
In Pak Rupees |
|
2007 |
10,365,224,000/-
|
Bankers
(1) ABN AMRO Bank, Pakistan.
(2) Askari Commercial Bank Limited, Pakistan.
(3) Bank Al-Habib Limited, Pakistan.
(4) CitiBank N.A., Pakistan.
(5) Crescent Commercial Bank Limited, Pakistan.
(6) Faysal Bank Limited, Pakistan.
(7) Habib Bank Limited, Pakistan.
(8) Habib Metropolitan Bank Limited, Pakistan.
(9) MCB Bank Limited, Pakistan.
(10) NIB Bank Limited, Pakistan.
(11) Standard Chartered Bank, Pakistan.
(12) United Bank Limited, Pakistan.
(13) Allied Bank Limited, Pakistan, Pakistan.
Economic Review
The Company’s gross
sales during the year increased by Rs. 1.5 billion, an increase of 17% from the previous year. This
increase has also helped the government in collecting more revenue in the form
of sales tax. Imposition of 1%
special excise duty on all of company’s products as well as increase in sales
tax rate on flexible packaging products which include plastics, foils, films
and polyethylene from 15% to 20% and from July 2007 has also
increased the contribution of company to the government revenue by 28% from last year. The company’s net
sales grew by 15% during the year.
Its packaging materials registered a growth of 12% during the year. Food and cigarette industries witnessed the
highest growth for flexible and rigid packaging businesses. Despite the decline
in corrugated cartons for the textile industry (due to low cotton production
and weak export demand) our corrugated boxes business has registered a 16% increase in sales by regaining lost
business, and an increase in demand of boxes for food. For paperboard products,
the start-up of PM-6 production from August 2007 enabled additional capacities
to become available to produce writing paper in Lahore and brown board in
Kasur. During the year under review we supplied for the first time liner and
fluting paper to the local converters of corrugated boxes as well as various
papers including printing, writing, photo copier, computer paper and paper to
the book printers in the local market. The paper supplied to the market was
well received because of its higher quality compared to the locally available
paper and hopefully, it would substitute imported paper in future. The
company’s tissue product business has registered a 14% growth. “Rose Petal”, our flag ship brand in consumer products,
dominated the market in year 2007 by delivering quality to the valued customers
in both consumer and institutional business. Its key focus on enhancing tissue
paper usage by providing innovative solutions to customer needs has shown
considerable success.
Business Overview
Although the total
gross revenue of the company increased by 17%, at the same time input costs
also increased due to unprecedented increase in petroleum prices which
escalated the freight charges for all imported materials. Similarly cost of
petroleum based raw materials used in flexible packaging products continued to
increase throughout the year. In the category of plastics, major price
increases were observed in the LLDPE (Linear Low Density Polyethylene) and LDPE
(Low Density Polyethylene) during 2007. Net price increase in LDPE was about
24% and in LLDPE about 11% during the year. This price escalation coupled with
increase in freight charges and foreign currency exchange rates had resulted in
raw material prices going up by more than 10%. At the same time increase in oil
prices and limited supply of wood chips has contributed to the upward price
trend of pulps, which has increased the paper and tissue raw material costs.
The increases in costs were partially compensated by price rationalization,
increased productivity and introduction of new technologically efficient
products. Accordingly gross margin percentages were under pressure for most of
the year despite sales showing a healthy growth in the packaging business. We
however, continue our sustained efforts to improve the margins. Another factor
affecting the financial results for the year was depreciation and financial
expenses of Phase-I of the Bulleh Shah Paper Mills for five months which were
not commensurate with the revenue due to lower start up capacity utilization in
its initial stage. However, if we segregate the company’s financial results
into its existing operations at Lahore and the Bulleh Shah operations, the
existing operations have made Rs.76 million more profit as against the previous
year.
Bulleh Shah Paper Mill Project
The company has
completed the first phase of Bulleh Shah Paper Mill situated near Kasur, and 70
km from the existing location, at the cost of Rs. 6.8 billion. The new plant
has a more efficient layout and is capable of producing board of international
quality. Presently Paper Machine (PM) 6 along-with high yield straw pulping
& OCC plants and its back processes like 11 MW power house, gas turbine and
primary effluent treatment-sedimentation and sludge dewatering are fully operational.
The paper and board manufactured on PM-6 is of higher quality, stronger and
more consistent because of the state of the art equipment. The PM-6 start up
capacity utilization during the five months is better than its projected
optimization curve and is delivering the desired quality product. With the
completion of first phase the company has increased its capacity of brown board
to 100,000 tonnes and its combined capacity to 200,000 tonnes. We are also
pleased to mention that the quality of the paperboard manufactured on PM-6 has
been very well received and the company has started exports to the Middle East,
Sri Lanka and Africa. Work on its second phase which includes erection of Paper
Machine (PM) 7, Coating machine, Deinking plant, 41 MW power house steam
turbine, and secondary effluent treatment is going in full swing. So far Rs.
6.9 billion has been spent on this phase and we are confident that the coating
machine, deinking plant would come into operation during the 2nd
quarter of 2008. Paper Machine (PM-7) and 41 MW power house would be completed
during the third quarter 2008.The company has incurred an aggregate cost of
Rs.13.7 billion on the project until the end of December 2007 and a further
cost of Rs.1.3 billion is expected to be incurred until the completion of PM -
7. Our initial estimates were based on discussions and quotations from the
vendors of the main machinery suppliers. The project also envisaged use of
refurbished secondhand equipment necessarily resulting in estimations. Accordingly
during the course of the project, necessary and qualitative changes in the
scope of the project were made which increased the project cost. Furthermore,
there has been the impact due to increases in prices of metals, civil work
materials and other costs. The management fully recognizes the impact and has
taken steps to ensure the availability of necessary financial and human
resources for the completion of the project. The project has been funded
through the issue of right shares, internal cash generation and long-term loans
from local banking consortium and International Finance Corporation. To
facilitate the movement of raw and finished materials to and from Kasur, we
have entered into an agreement with Pakistan Railways, whereby we have built a
platform and installed stackers on leased land at the Kot Radha Kishan railway
station to transport material through train. The Packages Container Terminal
was inaugurated in January 2008. This shall significantly reduce the freight
costs of incoming raw materials as well as finished products to Karachi.
Financial Position
Sound.
Comments
Subject Company is well known and directors are resourceful and
experienced businessmen. Trade relations are reported as fair. Payments to creditors etc are reported as
normal. The Company can be considered for normal business dealings at usual
trade terms and conditions.
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BALANCE SHEET |
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AS AT DECEMBER
31, 2007 |
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Note |
2007 |
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2006 |
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(Rupees in
thousand) |
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EQUITY AND
LIABILITIES |
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CAPITAL &
RESERVES |
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Authorised capital |
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150,000,000 (2006: 100,000,000) |
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ordinary shares of Rs. 10 each |
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1,500,000 |
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1,500,000 |
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Issued,
subscribed and paid up capital |
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73,373,482 (2006: 69,879,507) |
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ordinary shares of Rs. 10 each |
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5 |
733,735 |
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698,795 |
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Reserves |
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6 |
13,110,240 |
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6,872,336 |
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Unappropriated profit |
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4,326,797 |
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6,101,666 |
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18,170,772 |
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13,672,797 |
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NON-CURRENT
LIABILITIES |
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Long-term finances - secured |
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7 |
12,346,500 |
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6,000,000 |
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Deferred Liabilities |
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8 |
955,790 |
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688,455 |
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13,302,290 |
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6,688,455 |
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CURRENT
LIABILITIES |
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Current portion of liabilities against
assets subject to |
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finance lease |
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- |
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851 |
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Finance under mark up arrangements -
secured |
9 |
401,019 |
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1,280,857 |
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Trade and other payables |
|
10 |
1,564,362 |
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1,030,516 |
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1,965,381 |
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2,312,224 |
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CONTINGENCIES
AND COMMITMENTS |
12 |
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33,438,443 |
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22,673,476 |
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Note |
2007 |
|
2006 |
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(Rupees in
thousand) |
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ASSETS |
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NON-CURRENT
ASSETS |
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Property, plant and equipment |
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12 |
10,361,253 |
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3,071,115 |
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Intangible assets |
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13 |
363 |
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2,532 |
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Investment property |
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14 |
26,055 |
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14,423 |
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Assets subject to finance lease |
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15 |
- |
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1,901 |
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Capital work-in-progress |
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16 |
7,800,683 |
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10,143,195 |
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Investments |
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17 |
10,080,259 |
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5,775,665 |
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Long-term loans and deposits |
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18 |
244,166 |
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180,618 |
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Retirement benefits |
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19 |
88,262 |
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69,805 |
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28,601,041 |
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19,259,254 |
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CURRENT ASSETS |
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Stores and spares |
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20 |
715,840 |
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485,665 |
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Stock-in-trade |
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21 |
2,206,191 |
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1,647,173 |
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Trade debts |
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22 |
1,288,928 |
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821,160 |
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Loans, advances, deposits, prepayments |
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and other receivables |
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23 |
525,421 |
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353,521 |
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Cash and bank balances |
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24 |
101,022 |
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106,703 |
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4,837,402 |
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3,414,222 |
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33,438,443 |
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22,673,476 |
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PROFIT & LOSS
ACCOUNT |
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FOR THE YEAR
ENDED DECEMBER 31, 2007 |
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Note |
2007 |
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2006 |
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(Rupees in
thousand) |
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Local sales |
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10,365,224 |
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8,869,087 |
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Export sales |
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|
174,771 |
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158,820 |
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10,539,995 |
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9,027,907 |
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Less : Sales tax and excise duty |
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1,501,230 |
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1,172,430 |
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Commission |
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10,130 |
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8,878 |
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1,511,360 |
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1,181,308 |
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|
9,028,635 |
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7,846,599 |
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Cost of goods sold |
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25 |
(7,829,362) |
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(6,551,995) |
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Gross profit |
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1,199,273 |
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1,294,604 |
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Administration expenses |
|
26 |
(348,064) |
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(349,934) |
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Distribution and marketing expenses |
27 |
(240,357) |
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(225,587) |
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Other operating expenses |
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28 |
(145,439) |
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(213,475) |
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Other operating income |
|
29 |
122,185 |
|
252,005 |
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Profit from
operations |
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|
587,598 |
|
757,613 |
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Finance cost |
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|
30 |
(367,378) |
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(78,909) |
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Investment income |
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|
31 |
4,412,728 |
|
5,669,136 |
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Profit before
taxation |
|
|
|
4,632,948 |
|
6,347,840 |
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Taxation |
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|
32 |
(307,000) |
|
(247,060) |
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Profit after
taxation |
|
|
|
4,325,948 |
|
6,100,780 |
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Earnings per share - basic & diluted -
Rupees |
41 |
58.96 |
|
83.15 |
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FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.45.94 |
|
UK Pound |
1 |
Rs.82.84 |
|
Euro |
1 |
Rs.65.95 |
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)