Roshan Packages Limited was incorporated in 2002 with the objective of manufacturing quality packaging for its group company Roshan Enterprises which exports fruits. Since its incorporation, the company has grown each year and has now become one of the largest manufacturer and seller of packaging products in Pakistan.

Roshan Packages is part of the Roshan Group, which has been operating in Pakistan since 1959. The group companies include Urdu Digest, Roshan Enterprises, Roshan Sun Tao Paper Mills (Pvt.) Limited. The group was founded by Dr. Aijaz Hassan Qureshi in 1959, who after completing his PhD from Germany launched Urdu Digest.

The new generation of the group ventured into new businesses with Roshan Enterprises to export famous citrus fruits of Pakistan.

Roshan Packages manufactures two types of products, which are used by variety of industries. The first type is corrugated, which is used in packaging of fruits, vegetables, food, snacks, home appliances, pharmaceuticals, paint and textile.

The second type of product is flexible, which used in packaging of soaps, detergents, confectionery, beverages, cereals and ice-cream wrappers.

Roshan Packages has two plants. The flexible division plant is located 40 kilometers outside Lahore, while the corrugated plant is located in Sunder Industrial Estate.

Roshan Packages clientele includes some of the top companies operating in Pakistan. Revenue-wise the biggest customer of the company is Pepsi. Other clients include Lotte Kolson, Unilever, Continental Biscuits, Chase International, Tapal Tea, Prime Fruits International and Coronet Foods.
The company supplies its products to more than 500 customers out of which 60 have been in business with the company for over five years.

IPO Purpose

Roshan Packages Limited is looking to raise Rs1,137.5 million by issuing 32,500,000 shares at a floor price of Rs35. The funds will be utilised for expansion of production facilities to keep up with the expected demand of packaging material. 80 percent of the funds will be utilised for expansion.
The company also wants to pay off its short-term borrowings, and 11 percent of the funds will be utilised for this purpose.

Lastly, 9 percent of the funds will be used to meet the working capital requirement of the company.
Book building process of the IPO will take place from 17th to 18th January, 2017 for institutions and high net worth individuals. The general public subscription date has been set from 30th to 31st January, 2017.

Historical Performance

Roshan Packages financial performance has been stable over the last few years. According to the prospectus, the sales of the company have grown at compounded annual growth rate (CAGR) of 31 percent since 2009. Profit after tax grew at a CAGR of 48 percent during the same period. After the installation of flexible packaging product plant in 2011, the company witnessed a remarkable top line growth of 60 percent in a single year.

The gross and net margins of the company have been maintained at respectable levels. During FY16 the gross and net margins of the company were at 16 percent and 7 percent respectively.

Shareholding Pattern

Roshan Packages Limited currently has 75 million outstanding shares pre-IPO. All the shares are held by sponsors and directors. Mr. Tayyab Aijaz, the CEO of the company holds 28.8 million shares.

Industry

Packaging industry in Pakistan can be divided in to two sectors. The unorganised sector currently has 45 percent market share, while the organised sector contributes about 50 percent. Roshan Packages is part of the organised sector that includes listed companies like Century Paper and Board Mills (PSX: CEPB) and Packages Limited (PSX: PKGS)

The packaging industry with its direct link to the consumer sector and overall growth of the economy enjoys high valuation on the stock market.

Outlook

Roshan Packages has been increasing its sales to the FMCG sector over the last five years. Currently 64 percent of the sales are generated from the FMCG sector, which is expected to grow as the Pakistan economy accelerates. The company expects the consumer spending in Pakistan to increase from Rs27 billion to Rs34.8 billion in 2018. Being a direct supplier to the top consumer companies, Roshan Packages is in the sweet spot to cash in from this growth.

Moreover, investment activities from CPEC will also benefit the company as new industries and expansion will bring in more jobs which would increase the overall consumer spending in the country.