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Roshan Packages Limited

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Presentation on theme: "Roshan Packages Limited"— Presentation transcript:

1 Roshan Packages Limited
Company Overview

2 Upcoming IPO: Roshan Packages Limited
Transaction Overview Roshan Packages Limited (“RPL” or the “Company”) is in the process of raising capital through listing on Pakistan Stock Exchange (“PSX”). The Company has applied at PSX and is expected to commence marketing for its capital raising process post approval of PSX and the Securities and Exchange Commission of Pakistan (“SECP”) The proceeds of the IPO would be used for the following purposes: To invest in a new paper mill under a join-venture with a Chinese partner to manufacture and supply corrugated paper – c. 45% of the proceeds utilization To modernize and expand capacity of its existing corrugated and flexible manufacturing facilities – c. 45% of the proceeds utilization To meet part of the increased working capital requirements – c. 10% of the proceeds utilization

3 Fiscal Year Ending June 30th
Company Overview Background Financial Snapshot Roshan Packages Limited is one of the largest manufacturers and sellers of packaging solutions to exporters of fruits and also various local and multinational corporations. The Company has two principle product categories: Corrugated: the Company produces a wide variety of customized cartons to package consumer goods, fruits, textiles, electronic appliances, pizzas, etc. Flexible: the Company produces wrappers for confectionary, biscuits, snacks, ice-creams, detergents, and labels for PET bottles The Company has two principle manufacturing facilities over 16 acres in Sundar Industrial Estate approx. 40 kilometers from Lahore Roshan Packages sources its raw materials from both local and international markets; it imports c. 36% of its raw material requirements on which an import duty of 21% is applicable. An import duty of 20-25% would have been paid had the product manufactured by Roshan Packages were imported The Company is part of the Roshan Group, which also includes Urdu Digest: Pakistan’s largest Urdu publication covering science, literature, health, social and political affairs Roshan Enterprises: Pakistan’s leading exporter of fresh fruits and vegetables Fiscal Year Ending June 30th PKR in millions 2011 2012 2013 2014 2015 2016 Income Statement Revenue 1,389 2,220 2,740 3,066 3,568 3,622 Gross Profit 230 332 381 403 453 588 EBITDA 161 231 253 268 301 412 Profit after Tax 79 142 139 100 133 262 Balance Sheet Non-Current Assets 499 487 949 1,014 1,204 3,184 Current Assets 495 814 961 1,462 1,651 1,951 Shareholder’s Equity 306 539 747 873 1,019 1,288 Surplus on Revaluation 135 124 208 181 169 1,143 Non-Current Liabilities 106 89 225 200 344 1,087 Current Liabilities 448 549 730 1,221 1,323 1,617 Cash Flow Statement Cash Flow from Operations (5) 101 128 (176) 78 Cash Flow from Investments (151) (30) (215) (128) (54) (721) Cash Flow from Financing 13 15 85 238 (234) 696

4 Products Corrugated Flexible
Roshan Packages produces customized corrugated boxes for consumer products, fruits, textiles, electronic appliances, pizzas etc., flexible wrapping for confectionary, biscuits, snacks, ice-creams, detergents, etc., and wrapping labels for PET bottles

5 Top Clients Client Products / Brands Corrugated Flexible
Roshan Packages has a history of maintaining and developing long-term professional relationships with its clients. Out of a total of over 500, more than 60 clients have been in business with the Company consistently for more than five years, while its top ten clients contributed c. 65% to revenues in FY 2016. Client Products / Brands Corrugated Flexible Pepsi-Cola International Lays , Cheetos, Kurkure, Wavy Lays , Cheetos, Kurkure Lotte Kolson Slanty , Snacker Slanty , Snacker , Potato Stick , Twich Continental Biscuits Tuc, Tiger, Prince Chocolate, Oreo, Candi, Gala Unilever Pakistan Surf Excel, Vim, Lipton, Supreme Sunlight, Vim, Choc Bar, Feast, Jet Spot Chase International Mandarin - Coronet Foods Rio, Chocolate Sandwich, Lemon Sandwich, Sooper Unilever Pakistan Foods Knorr Noodles, Mayo, Rafhan Custard, Corn Oil Knorr Noodles Tapal Tea Tez Dum, Danadar, Green Tea Tez Dum, Top Liner, Tea Liner Roshan Enterprises Mandarin, Mango, Vegetable Prime Fruits International

6 The Packaging Industry
Strong Market Share in the Organized Packaging Sector Small to mid-scale cottage industries account for 45% of the packaging market A few large players in the organized sector account for 50% of the packaging market Imports make up 5% of the total packaging market Roshan Packages has a leading market share amongst the producers of corrugated boxes in the organized sector and is the second largest firm providing flexible wrappings. Source: Information provided by the management of RPL based on their best estimates of the respective companies’ overall production capacities

7 The Packaging Industry (Cont.)
End Market Dominated by Fruit and FMCG Packaging products in Pakistan are mostly consumed by the Fast Moving Consumer Goods (“FMCG”) and Fruit sectors Roshan Packages drives c. 94% of its sales in FY 2016 from those two sectors Source: Information provided by the management of RPL based on their best market estimates

8 Strong Growth in Fast Moving Consumer Goods
Growth in the Fast Moving Consumer Goods (“FMCG”) sector is driven by: Increase in the Pakistani middle class Strong growth in Pakistani Gross Domestic Product (“GDP”) Larger increase in overall consumer spending in Pakistan North America Europe Central and South America    Asia-Pacific Sub-Saharan Africa Middle East & North Africa Source: McKinsey & Company Research F Source: World Bank Source: Statista, The Statistics Portal

9 Shortage of Excess Capacity Affecting Revenue Growth
Roshan Packages has been facing capacity shortage that has affected its ability to grow sales The Company has decided to undergo expansion to increase capacity, diversify its product offerings and increase operational efficiency It increased capacity in Flexible division during last quarter FY 2016 and will roll out remaining expansions in FY 2017 and 2018 Achieved 27% YoY revenue growth in first quarter FY 2017 Note: the Company increased capacity in its Flexible plant during 4Q16, and thus its capacity utilization for FY 2016 isn’t indicative of production over the year Revenue CAGR : 41% : 23%

10 Expansion of Corrugated Plant
Roshan Packages has invested in an state-of-the-art corrugator from BHS Corrugated, a world-class German-based manufacturer of corrugators and corrugated rolls with over 50 years of experience The machinery has already arrived at Roshan Packages’ pant and will be erected and commissioned in phases during FY 2017 and FY 2018 The corrugated plant’s production capacity will increase from 30,000 metric tons to 60,000 metric tons during third quarter of FY 2017 and will subsequently increase to 90,000 metric tons during first quarter of FY 2018 The expansion will cost c. PKR 940 million, out of which Roshan Packages has already invested c. PKR 360 million. Part of the proceeds from the equity raising shall be used for this purpose

11 Expansion of Flexible Plant
Roshan Packages has invested in the following world-leading manufacturers of printing machinery: Extrusion machine from WindMoller & Holscher, Germany Rotogravure printing machine WindMoller & Holscher, Germany Wax coating machine from Uteco, Germany The extrusion machine and the rotogravure printing machine were installed during fourth quarter of FY 2016 and have increased the flexible plant’s production capacity from 3,600 metric tons to 10,800 metric tons The wax coating machine will be installed during FY 2017 and will subsequently increase production capacity to 12,240 metric tons The expansion will cost c. PKR 1,350 million, out of which Roshan Packages has already invested c. PKR 905 million. Part of the proceeds from the equity raising will go towards this purpose

12 Roshan Sun Tao Paper Mills (Private) Limited
Roshan Packages has initiated backward integration by establishing a subsidiary Roshan Sun Tao Paper Mill to supply corrugated paper The paper mill is a joint-venture with Shangdong Yongtai Paper Mill, a Chinese manufacturer of corrugated paper Shangdong Yongtai has paper producing capacity of 120,000 metric tons and is in process of increasing capacity to 600,000 metric tons; it recorded revenues of PKR 4.4 billion (RMB 281 million) in FY 2015 Shangdong Yongtai is part of the Shangdong Yulong Real Estate Group, a diversified conglomerate with interests in real estate, construction, water and power, concrete, recreation, and trade. Roshan Sun Tao will have a capacity of 137,000 metric tons and is expected to be operational by FY 2019 Roshan Sun Tao is expected to provide c. 30% of its produce to Roshan Packages and the rest to the market in FY 2019 The paper mill is expected to cost c. PKR 4 billion, with 60% expected to be financed through debt and 40% through equity Roshan Packages will own 60% of the equity share while Shangdong Yongati will retain the remaining 40% of the equity share Shangdong Yongtai has subscribed its portion of the equity at an 83.33% premium

13 Roshan Sun Tao Paper Mills (Private) Limited (Cont.)
The paper mill will provide the following benefits: Ease shortage of high quality corrugated paper available to Roshan Packages Cater to the rising demand of corrugated paper in the domestic market The paper and board industry in Pakistan has been declining due to large presence of cottage industries, whose products are of low and inconsistent quality Most corporate and export-oriented companies in Pakistan have therefore increasingly turned towards importing paper Roshan Sun Tao can offer inexpensive and high quality substitute for imported paper, which stood at c. 600,000 metric tons in FY 2014 Source: The Pakistan Business Council


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