Lahore, August 09, 2019 (PPI-OT): Pakistan’s Polyethylene Terephthalate (PET) packaging sector mostly derives its demand from bottled water and carbonated beverage industry, while, edible oil sector has become an upcoming demand driver. The industry use variants of PET Resin to manufacture plastic caps (closures) and PET preforms. During FY18, PET Resin segment generated a total revenue of PKR 37bln. Having a capacity utilization of 70% – 72%, PET preforms segment is experiencing a volumetric growth and generated an estimated revenue of PKR 27bln. Plastic Closures had an estimated revenue of PKR 2.7bln in FY18.
The ratings reflect Pakistan Synthetics Limited’s integrated position in PET industry. The Company entered the business arena by tapping in the PET Resin and Capping segments. However, recently the Company has set up Preform manufacturing facility. This led the Company’s topline to post a volumetric growth. Margins remain stable, however, are subject to volatility in raw material prices due to currency devaluation. Surged exchange loss, in line with high finance cost, stresses the Company’s profitability.
The Company’s leveraging remains high to fund the working capital requirements. This, coupled with the rising interest rate scenario could exert pressure on the financial profile of the Company. However, the management plans to streamline the debt mix. This, along with better cashflows, is expected to manage the financial risk.
The ratings are dependent on the management’s ability to strengthen the relative positioning of the Company in the industry. Improvement in business margins and, in turn, profitability remains imperative. Any deterioration in the Company’s coverages would have negative impact on the ratings.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
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Category: General Business News