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Packages Limited Pakistan

Packages Limited Pakistan

 Packages Limited Pakistan was established as a joint venture between the Ali Group of Pakistan and Akerlund and Rausing of Sweden in 1956. 

The company provides packaging solutions for a vast number of national and multinational companies in Pakistan, while also exporting its products to other markets.

In an exclusive interview with BR Research, chief executive and managing director, Packages Limited Pakistan, Syed Hyder Ali explained, 

“The philosophy of our group is to tie up with those organizations that are among the world leaders in their industry. They bring the technical know-how and experience while we provide them with the local support. But you have to let them run the show”.

The company has stakes in myriad prominent businesses including 

Nestle Pakistan, Sanofi Aventis, IGI Insurance and Coca-Cola Beverages Pakistan besides contributing to the country’s social sector through Lahore University of Management Sciences, Liaquat National Hospital, Shalimar Hospital and other initiatives.

Discussing the core business of Packages Limited Pakistan, he explained that the majority of the company’s customers on the packaging side are in the consumer business. “Seventy percent of these customers are multinationals while the rest are national companies. Given the fact that these companies are growing at an average of 30 percent despite the current economic uncertainty; you can see that this business is doing extremely well” says Hyder Ali.

He adds that the company will continue to pursue aggressive growth plans within this industry because “these businesses are doing quite well. Besides, our core focus has been in manufacturing and we intend to keep it that way”.

FROM STRENGTH TO STRENGTH

Despite the company’s strong position within the packaging industry, it continues to explore new product lines to augment its current portfolio. “Our main focus within the paper market is to replace high-quality paper products which are currently being imported from other countries. Majority of the high-quality photocopying paper sold in the local market is imported from the Far East” said the managing director, adding that the company’s new paperboard plant at Kasur is concentrating on exploiting this lucrative market, besides providing paper board for the company’s packages.

The new site has already started producing paper products and will soon commence production of packaging board as well. Among the company’s paper products is Copy Mate Plus which is manufactured from virgin-based fiber as well as Copy Mate which is manufactured from recycled paper. “We are the only company producing paper from recycled fiber” he boasts. Hyder Ali also revealed that the company is eyeing export markets for the same products.

Hyder Ali revealed that the capacity of Kasur’s Bulleh Shah Project is three times that of its older facilities in Lahore, in terms of production of paper and paperboard. The company is currently in the process of shifting production processes to the new plant although older equipment has not been moved to Kasur. Instead the company has installed new machines at the Bulleh Shah plant.

Paperboard facilities at the Lahore factory will be shut down by the end of 2012. Thereafter the company plans on developing “50-60 acres out of a total of 100 acres available here to develop offices, shops and other commercial establishments in a phased manner”.

CONTROLING COSTS

The company’s total sales stood at about Rs22 billion, last year. While local sales have posted healthy gains over successive years, export sales for Packages Limited Pakistan more than doubled between 2009 and 2010.

According to the chief executive, roughly 70 percent of the company’s revenues are generated through sales of packages while the remaining amount is generated from paper products. The company earns healthy margins on the former product line however “consistent increases in energy costs as well prices of local and imported raw materials have squeezed margins on paper products in recent times” he says. Despite receiving gas supply guarantees from SNGPL, the company faces gas load shedding just like other industries located in Punjab. Prices of raw materials have also gone up as commodity prices have spiraled since 2008.

But the company is already fighting back to control cost escalation on these fronts. “We are setting up our own waste paper collection operations. On the energy front we are considering alternative agri-based fuels such as straw and corn stocks to reduce reliance on furnace oil, diesel and natural gas” says the chief executive adding that these facilities will be up and running within the next two years.

The use of alternative fuels will allow the company to earn carbon credits, while its cost of acquiring energy would also be reduced to a fraction of the cost incurred on furnace oil-based power generation. The company already has its own captive power plant with a capacity of about 40 megawatts but the cost of producing energy from this plant is high in the absence of natural gas supplies.

EXPANSION PLANS

Packages Limited Pakistan is keen on increasing its presence in Karachi by establishing manufacturing facilities in the city. But national borders do not limit the company’s growth and it is aggressively eyeing prospective markets within the region as well as other parts of the world.

“We already have a presence in Sri Lanka where our associated company is the largest manufacturer of paperboard with more than a fifth of the total market share” says Hyder Ali. He reveals that the company intends to step up operations in that country while also establishing manufacturing facilities in African countries. “Countries like Kenya, Ethiopia and Tanzania are still meeting most their paper and paperboard requirements through imports so these are viable markets for us to expand in” he says.

Hyder Ali opines that liberalizing trade with India would benefit the overall economy of the country. “Some businesses will definitely feel the pinch of increased competition but others will benefit from access to larger markets. Above all, the consumers will benefit from trade liberalization between the two countries” he contends.

Highlighting the location of the company’s manufacturing facilities he says “Kasur is only about 15 kilometers from the Indian border so we are well placed to enter northern Indian markets”. However he accedes that given the long history of tense relations between Pakistan and India; trade liberalization will be a long-drawn and phased process.

LOCAL BUSINESS ENVIRONMENT AND GROWTH POTENTIAL

Packages Limited Pakistan invested about Rs400 million to set up a treatment plant to process effluent from its processes. “We have always focused on ensuring that the environmental impact of our operations must be minimized” says Hyder Ali. But he laments that other companies in the industry are not environmentally conscious and thus their operations often have dire consequences for the surrounding environment.

Hyder Ali reveals that degradation of forests in the country also has negative repercussions for the capacity of the paper and board industry of the country. “At present less than three percent of the total area is forests” he says adding that the latest paper mills being installed in other countries require significant scale of up to one million tons of wood per day. “That requires thousands of acres of forest land and at least a fifty year lease; both of which are uphill tasks in Pakistan” he says.

“Our people are second to none. They are extremely hardworking, intelligent and enterprising. They are the backbone of the country’s economy. Give them the requisite physical infrastructure such as energy, road and rail networks along with social services such as basic education and this economy will be booming” contends the chief executive of Packages Limited Pakistan. Highlighting healthy economic growth witnessed during the early 2000s he asserts that “political stability and consistency in policies can reap immediate results in terms of job creation and growth.”

“If the private sector can be facilitated in terms of energy and infrastructure, companies would be lining up to invest here because the legal structure in the country is already quite conducive for investments compared to regional markets such as India” sums up Syed Hyder Ali.

Fatima Fertilizer Restuctures Equity

Fatima Fertilizer Restuctures Equity