Starting out with Publication, Fruit Pro­cessing and then Exports, the Roshan Group added ‘Corrugation Packaging’ in 2002 and expanded into ‘Flexible Packaging’ in 2011.

Roshan Packages Limited (RPL) was the first to float an Initial Public Offering (IPO) in February this year. RPL intended to raise Rs1.14 billion through the offer of 32.5 million shares at the floor price of Rs35 per share.

Both in the ‘book building process’ and the subsequent IPO to the general public, the RPL received warm was heavily over-subscribed. Besides the company’s own merits, investor confidence may have received a boost from the extended rally at the Pakistan stock Exchange, which lasted till mid-May.

Yet, the share in RPL is currently trading at Rs53, representing substantial premium over the offer price. Only seven companies are listed on the ‘Paper and Board’ sector of the PSX.

RPL corrugation plant and the flexible plant are located at Sundar Industrial Estate, Lahore. The company counts Unilever, Tapal, Waves, United Snacks, Mayfair, Ismail Industries Limited, LU, Pepsi, Haier, Kolson Haleeb Foods, Peak Freens and others among its clients.

In its FY2016 annual report and accounts, available on the company’s website, RPL as a Private Limited company had earned profit after tax at Rs262 on a turnover of Rs3.62bn. Total assets of the company stood at Rs5.135bn with property, plant and equipment valued at Rs2.920bn.

The company is yet to release detailed accounts for the first full year ended June 30, 2017 as a listed company, which investors must be anxiously awaiting to learn from the directors the performance, payout and business outlook.

Going forward, the company appeared to bank on economies of scale as its major customers were also in various stages of expansion

The sales revenue for the last released nine months accounts ended March 31, 2017 was recorded at Rs3.084m, registering a growth of 12pc over the corresponding period of the previous year. Resultantly the company earned gross profit of Rs 438m showing improvement of 28.8pc over the gross profit at Rs 340m, same time last year.

The sale revenue for quarter ended was recorded at Rs. 992m compared to Rs. 1,035m in previous similar quarter, reflecting a decrease of four per cent attributed to decreasing trend of prices.

Directors, in their nine-month report, pointed out that the Earnings before interest, tax, depreciation and amortisation (EBITDA) — a measure of a company’s operating performance — stood at Rs434m against Rs288m YoY yielding a margin of 14pc, which was about 3.5pc higher than the comparable period.

“Our sales have been increased in terms of quantities by 16.7 pc as compared to last period however due to downward trend of prices, the revenue side shows an increase of 12pc only”, directors asserted.

The earning per share for the period under review rose to Rs3.14 as compared to Rs2.42 in corresponding period last year.

At the last discussion with the company CEO, Tayyab Aijaz, regarding the expansions in both flexible and corrugation plants, he had told this writer that Roshan Packages, in participation with Chinese investors, was in the process of establishing a dedicated corrugated paper mill for backward linkages of its corrugated plant.

He said that the plant, to be called ‘Roshan Sun Tao’, would provide high quality and low cost paper to Roshan Packages and cater to the domestic packaging market.

“Execution of expansion plans are in-line with the provided framework”, directors assured in the latest released third-quarter report.

Corrugation plant, along with its ancillary equipment and machines, was installed successfully and was in the commissioning phase. The company proposed to conduct test runs and start commercial production.

The Flexible project was in an advance stage of completion. Wax coating machine acquired from M/s Uteco were installed and were about to be commissioned.

The latest annual report and accounts of the company for the year ended June 30, 2017 would show the status of all the ongoing expansion projects.

Investors would be interested to know the progress of the dedicated corrugated paper mill ‘Roshan Sun Tao’ which has been targeted to come on-line by FY2019.

Regarding the near term outlook on business, the directors said in their nine-months report that the company could foresee “strong demand in the packaging sector due to favourable growth patterns in food and FMCG sectors”.

However, due to overall decrease in prices of raw material and commodities around the world, sale prices could also witness declining trends. Going forward, the company appeared to bank on economies of scale as its major customers were also in various stages of expansion.

According to sector analysts, Pakistan’s packaging industry is valued at Rs55bn, growing at an annualised rate of 17pc since 2003.

Half of the pie is taken up by the organised sector, while the cottage industry has a share of 45pc with remaining five per cent being imports. The cottage industry is unable to meet the requirements of corporations and export-oriented clients.

Fast moving consumer goods are the biggest consumers of packaging products followed by fruit suppliers.

Published in Dawn, The Business and Finance Weekly, October 3rd, 2017