Press Release

VIS Reaffirms Entity Ratings of International Packaging Films Limited

Karachi, October 5, 2023: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of International Packaging Films Limited (IPAK) at 'A/A-1' (Single A/A-One) with 'Stable' outlook. The medium to long-term rating of 'A' denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of 'A-1' signifies high certainty of timely payment with excellent liquidity and good company fundamentals. Risk factors are minor. Previous rating action was announced on June 30, 2022.

The assigned ratings factor in the elevation in business risk owing to severe currency devaluation, volatile input prices and enhanced competition from imports due to regulatory changes. Additionally, capacity enhancement of competitors as well as introduction of new players within the BOPP industry in the medium-term are expected to intensify the competitive environment. However, these risks are moderated by the Company's sizeable market share, oligopolistic nature of local BOPP industry, inelastic demand base and limited impact of import restrictions. Stable projected demand is a function of clients emanating from non-cyclical industries, namely, FMCG, pharmaceutical and cosmetic sectors. Ratings factor in sizeable capital injections (majorly financed through equity) by IPAK in its subsidiaries to sustain market presence within the packaging sector amidst higher competition.

The assessment of financial risk profile takes into account double-digit topline growth over the rating review period driven mainly by higher selling prices. Gross margins witnessed a notable uptick on the back of inventory gains during FY23 that offset the impact of higher finance costs and elevated tax expense due to expiry of related exemptions on overall profit levels during the review period. Cash flow generation remained sufficient resulting in comfortable debt-payment capacity during FY23. Albeit increasing, gearing and leverage levels remain sound against the benchmarks for the assigned ratings due to sizeable growth in the equity base to finance investments in subsidiaries. Ratings remain sensitive to maintaining financial risk profile amidst challenging macroeconomic and competitive market environment, going forward.

For further information on this ratings announcement, please contact the undersigned at 021-35311861-66 (Ext: 207) or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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