Press Release

VIS Reaffirms Entity Ratings of Century Paper & Board Mills Limited

Lahore, February 26, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Century Paper & Board Mills Limited (CPBML) at ‘AA-/A-1’ (Double A Minus/ A-One). Long term rating of ‘AA-’ signifies high credit quality with strong protection factors. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of ‘A-1’ depicts high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned rating is ‘Stable’. The previous rating was announced on December 30, 2022.

CPBML commenced operations in 1984, primarily focusing on the manufacturing of diverse paper and board products. This includes multi-ply one-side clay-coated packaging boards, uncoated boards, machine-finished writing and printing papers, machine-glazed papers, and corrugated boxes. The ratings incorporate the strong sponsor profile, aligning with the majority shareholding held by the Lakson Group, which is involved in various business sectors such as FMCG, fast food, insurance, media, paper, technology, and asset management.

The paper and packaging industry in Pakistan, integral to the manufacturing sector, faces a multifaceted array of challenges and opportunities. During FY23, the industry experienced a slight production decrease, primarily due to supply and demand-side challenges. These included difficulties in procuring imported raw materials amid global supply constraints and import controls, as well as a demand slowdown caused by inflationary pressures that reduced consumer disposable income. A significant risk for the sector is its heavy reliance on imported raw materials like wood pulp. The cost of these imports has substantially increased largely due to the depreciation of the Pakistani rupee against the US dollar and a rise in the average import price for wood pulp. However, according to the management, the company is able to pass on the impact to their customers.

Assessment of financial risk profile takes into account consistent growth in revenue. The growth in sales was primarily driven by upward price adjustments, although market demand experienced a downturn, resulting in a decrease in volumes and margins. Import constraints and currency devaluation prompted the company to try to look for local alternates to the imported raw materials. Coverages have been on the decline while overall liquidity has been adequate. Leverage indicators have remained range bound. Apart from equity, the balance sheet is funded with a mix of long and short-term borrowings. The proportion of long-term financing has increased in the overall financing mix. According to the management, the company completed its capacity expansion during the first half of FY24 and now has no plans to mobilize long-term financing in the medium term. BMR projects will be financed through internal capital generation; the management is projecting gradual decrease in leverage indicators, going forward. Ratings remain sensitive to improvement in volumetric sales, gross margins and coverages while maintaining gearing at manageable level.

For further information on this rating announcement, please contact the undersigned at 042-35723411 (Ext. 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: Industrial Corporates

VIS Issue/Issuer Rating Scale

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