1.
MACPAC Films Limited
Expansion Rationale
Forecasted Demand vs. Forecasted Supply
Note:
1 Please see appendix for detailed workings on demand scenarios
Source: Company Management, Financials & Next Research
 Polypropylene based packaging in Pakistan has seen rapid growth and ascent after 2013, presently the nameplate capacities of all 3 producers combined are around ~ 123,160 tons per annum however this figure does not account for two
major items:
 Tripack’s nameplate capacity of 66,800 includes two obsolete plants of 5,400 tons per annum each
 All producers manufacture BOPP films in a range of thicknesses from 10 to 60 microns, switching production from each thickness results in stoppage and downtimes which reduces the “nameplate” capacity by approx. 20%
 Adjusting these factors into the calculation provides us with the “maximum possible capacity” of each producer hereinafter referred to as “practical capacity”. Practical capacities for all producers combined is ~ 83,000 tons per annum.
 On the demand side, industry estimates and our workings put the annual demand at ~ 80,000 tons per annum, almost in heel with combined practical capacities. Assuming the industry grows at the historical rate of 15%1, by 2023 demand will
have outstripped supply.
 It is pertinent to note that all producers have some exports which results in local demand having already outstripped local supply.
 This has resulted in many industries switching over to BOPET for use cases that are better served by BOPP.
 Our estimate of forecasted demand does not account for various developments that we foresee happening in Pakistan:
 Polymer based currency notes are a major consumer of BOPP with regional countries like Singapore & Thailand already adapting plastic currency. In recent times, State Bank of Pakistan expressed its intent to launch the 75 Rupees
note as a polymer note however due to factors like recent floods adding burden on the national exchequer, the proposal was shelved. Pakistan currently only uses paper / cotton currency and shifting to polymer notes will add
substantial demand for BOPP
 BOPP has strong global demand providing opportunities to local players to expand their export sales. Coupled with increasing local demand, the upcoming expansion will easily be absorbed both locally and globally
 Currently products are packaged in various non-eco-friendly polymer substrates, however given the growing environmental pressures will require flexible packaging to conform to these standards which will inevitably allow for higher
BOPP demand as the other polymers are not as recyclable
 MACPAC’s expansion shall be breakeven in the first year of its production as it has firm orders in hand for 20,000 – 25,000 tons per annum from existing customers. With the increase in customers base as a result of new businesses and
ventures entering Pakistan, MACPAC will achieve nearly full utilization on its expansion within a period of 3 - 4 years from start of production.
1
Tons per Annum1 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Total Max Demand 63,570 71,266 73,104 107,164 134,443 162,062 176,158 192,778 205,739 212,716 213,968 213,968 213,968 213,968
Total Max Available Supply 83,311 83,311 83,311 131,016 177,035 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968
Total Available Surplus Capacity 19,741 12,045 10,207 23,853 42,592 51,906 37,810 21,190 8,229 1,252 N/A N/A N/A N/A

2.
MACPAC Films Limited
Expansion Rationale
Pakistan still lags many developed countries in Plastic Consumption per Capita
Source: World Trade Organization
 Plastic consumption is heavily correlated between GDP growth rate and plastic consumption, even then Pakistan having a strong GDP growth rate has not seen substantial increase in plastic consumption. Plastic consumption in Pakistan is still
behind many countries (including developed & developing) with per capita consumptions at one of the lowest globally.
 Even if the entirety of the upcoming expansions operate at full capacity and absorbed completely, Pakistan would still only reach 14 kgs per annum of plastic consumption.
 The figure for plastic consumption includes all petrochemical plastic products consumed which comprise various other products such as PET, HDPE and LDPE
2
Pakistan
Plastic Consumption per Capita:
7 kgs per annum
Japan
Plastic Consumption per Capita:
108 kgs per annum
Asia Average (Excluding Japan)
Plastic Consumption per Capita:
36 kgs per annum
Global Average
Plastic Consumption per Capita:
45 kgs per annum
Polypropylene production must
increase by a factor of at least
7x – 8x to reach
Polypropylene production must increase by a factor of
at least 17x – 18x to reach
3 Engro’s Propane Dehydrogenation Plant is a testament to growing Polypropylene Demand
 Engro Corporation Limited is installing a 750,000 tons per annum propane dehydrogenation plant in Karachi.
This petrochemical complex will cost up to USD 1.0 Billion and will produce Polypropylene Polymer on spec
with some of the finest producers globally.
 Considering the business pedigree of Engro Corporation, it lends credibility to the growing demand of
polypropylene packaging in Pakistan
 Compounding on this fact, the duty structures present in Pakistan make the imports of finished goods much
more expensive than locally manufactured products
Pakistan
Polypropylene Imports
524 Million Kilos per annum
USD 750 Million per annum
Pakistan
Finished Goods Imports
2.1 Million Kilos per annum
USD 11.9 Million per annum
Polypropylene production must
increase by a factor of at least
5x – 6x to reach

3.
MACPAC Films Limited
Appendix: Demand Scenario # 1
Source: Company Management, Financials & Next Research
2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Tripack - Current 31,590 31,590 31,980 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000
Tripack - Expansion (2023) - - 23,853 27,597 31,930 36,943 42,743 47,705 47,705 47,705 47,705 47,705 47,705
Total Demand from Tripack 31,590 31,590 31,980 62,853 66,597 70,930 75,943 81,743 86,705 86,705 86,705 86,705 86,705 86,705
IPAK - Current 24,178 29,021 29,021 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000
IPAK - Expansion (2024) - - - - 23,010 26,622 30,802 35,638 41,233 46,019 46,019 46,019 46,019 46,019
Total Demand from IPAK 24,178 29,021 29,021 32,000 55,010 58,622 62,802 67,638 73,233 78,019 78,019 78,019 78,019 78,019
MACPAC - Current 7,802 10,655 12,103 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311
MACPAC - Expansion (2025) - - - - - 18,467 21,366 24,720 28,601 33,092 36,933 36,933 36,933 36,933
Total Demand from MACPAC 7,802 10,655 12,103 12,311 12,311 30,778 33,677 37,031 40,912 45,403 49,244 49,244 49,244 49,244
Total Max Demand 63,570 71,266 73,104 107,164 133,918 160,330 172,422 186,412 200,850 210,127 213,968 213,968 213,968 213,968
Total Max Available Supply 83,311 83,311 83,311 131,016 177,035 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968
Total Available Surplus Capacity 19,741 12,045 10,207 23,853 43,117 53,638 41,546 27,556 13,118 3,841 N/A N/A N/A N/A
 MACPAC already has firm orders in place for 22,000 Tons per annum
 These orders account for roughly 50% of the nameplate capacity of its upcoming line
 This scenario assumes that the other 2 producers will also have the same percentage of firm orders which is why they are expanding capacities
 Post-installation we're assuming a 15.7% growth for all producers which has been the average growth for the industry when they have ample capacity
Scenario: Expected Demand Growth for all players is the same as MACPAC (Firms Orders Method)
1

4.
MACPAC Films Limited
Appendix: Demand Scenario # 2
Source: Company Management, Financials & Next Research
2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Tripack - Current 31,590 31,590 31,980 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000 39,000
Tripack - Expansion (2023) - - - 23,853 28,122 33,156 39,091 46,088 47,705 47,705 47,705 47,705 47,705 47,705
Total Demand from Tripack 31,590 31,590 31,980 62,853 67,122 72,156 78,091 85,088 86,705 86,705 86,705 86,705 86,705 86,705
IPAK - Current 24,178 29,021 29,021 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000
IPAK - Expansion (2024) - - - - 23,010 27,128 31,984 37,709 44,459 46,019 46,019 46,019 46,019 46,019
Total Demand from IPAK 24,178 29,021 29,021 32,000 55,010 59,128 63,984 69,709 76,459 78,019 78,019 78,019 78,019 78,019
MACPAC - Current 7,802 10,655 12,103 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311 12,311
MACPAC - Expansion (2025) - - - - - 18,467 21,772 25,669 30,264 35,681 36,933 36,933 36,933 36,933
Total Demand from MACPAC 7,802 10,655 12,103 12,311 12,311 30,778 34,083 37,980 42,575 47,992 49,244 49,244 49,244 49,244
Total Max Demand 63,570 71,266 73,104 107,164 134,443 162,062 176,158 192,778 205,739 212,716 213,968 213,968 213,968 213,968
Total Max Available Supply 83,311 83,311 83,311 131,016 177,035 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968 213,968
Total Available Surplus Capacity 19,741 12,045 10,207 23,853 42,592 51,906 37,810 21,190 8,229 1,252 N/A N/A N/A N/A
 In recent years demand has grown at an average of 17.9% when there has been ample capacity to offer
 We have assumed the same scenario to apply to all other producers, taking their most recent year with a surplus and extrapolating growth from that period
Scenario: Expected Demand Growth is flat (Flat Growth Method)
2

5.
MACPAC Films Limited
Appendix: Competitive Landscape Overview
Flexible Packaging in Pakistan can effectively be split into three main products and various sub-products called laminates which combine main products
BOPP
Process Key Players Key Messages
 Polypropylene resin / polymer is extruded to form a
thin film
 Polypropylene Film is then stretched in both the
machine direction & traverse direction to produce
Biaxially Oriented Polypropylene Film
 Films produced can vary in thickness (10 – 60
microns) and properties (opacity, color etc.) as per
additives added
 BOPP films are the most preferred substrate for food packaging due to
its excellent moisture barrier properties, sealability, clarity, graphical
appeal and shelf appeal
 BOPP films are also preferred over other substrates in other uses such
as labeling where its yield benefit (lowest density possible of all
substrates) provide significant cost reductions over cellulose-based
labels
Tri-pack Films Limited
International Packaging Limited
Lahore Polypropylene Industries Limited
CPP
 Polypropylene resin / polymer is casted & extruded
to form a film almost in the same manner as BOPP
film
 Unlike BOPP, CPP films are unoriented and are
only stretched in singular direction (i.e., machine
direction)
 CPP films like BOPP can be produced in a wide
variety of thickness and properties
 CPP films are used in applications where impact, tear & puncture
resistance are the primary requirement as due to a singular stretch
direction CPP films can withstand more stress than BOPP films
 CPP films have a higher softening point of 140° C which allows CPP to
be used in applications such as hot filling, retort packaging etc.
BOPET
 Molten Polyethylene Terephthalate resin / polymer
is extruded onto a chill roll, which quenches it into
the amorphous state
 The film is then biaxially drawn and stretched
similar to a BOPP film
International Packaging Limited
Ismail Industries Limited
Novatex Limited
Plastiflex Films (Private) Limited
 BOPET is primarily used as a laminate in combination with other
polymers and in applications where tensile strength matters most along
with strong gas and aroma barrier properties
 In addition, due to its non electrostatic nature BOPET is an excellent
carrier for electronic products

6.
MACPAC Films Limited
Appendix: Competitive Landscape - Financial Snapshot
 MACPAC boasts the 2nd highest gross margin whilst
having the smallest installed capacity in the industry
 This is due to its superior managerial efficiency along
with technical prowess as represented by higher margins
on a plant that has been in operation since 1996
 Almost all the players in the industry have been
operating at near full capacities and have yet not
inducted new plants or incurred capital expenditure
 That in turn as resulted in lower depreciation expenses
as well as financial costs
 As its competitors add capacity, MACPAC too has
planned capacity additions via this project in order to
boost production
Key Comments
MACPAC Tri-pack IPAK
FY2022 FY2021 FY2021
Sales 4,174 19,054 7,044
Cost of Goods Sold 3,446 15,058 5,858
Gross Profit 728 3,996 1,186
Operating Expenses 205 934 173
Earnings Before Interest, Tax, Depreciation & Amortization 523 3,063 1,268
Depreciation & Amortization 121 818 255
Earnings Before Interest & Tax 402 2,245 1,013
Other Income 79 104 16
Other Expenses 121 108 68
Financial Cost 94 826 188
Earnings Before Tax 266 1,415 773
Taxation 78 373 106
Net Income 188 1,042 667
Financial Comparison vs. Peers
1
1
2
2
Source: Financial Statements
2
Market Share by Revenue
MACPAC
10%
Tri-pack
66%
IPAK
24%

7.
MACPAC Films Limited
Appendix: Competitor Landscape - Geographical
Installed Capacity Expansion Plan
Installed Capacity1
Expected Capacity
Revenue (Product) Sales Breakup
Legend:
Products:
BOPP
CPP
BOPET
Sales:
Export
Local
Expansion Plan Expected Capacity
Revenue (Product) Sales Breakup
Installed Capacity Expansion Plan Expected Capacity
Sales Breakup
Notes:
1 MACPAC – Installed BOPP Capacity: 15,000 TpA; Installed CPP Capacity: 6200 TpA
2 IPAK – Installed BOPP Capacity: 41,360 TpA
3 Tri-Pack – Installed BOPP Capacity: 66,800 TpA; Installed CPP Capacity: 17,000 TpA
Source: MACPAC Management, IPAK Prospectus & Tri-pack Financial Statements
 Both Tri-pack and MACPAC are situated in the South as
that’s where majority of the demand is generated owing
to proximity the manufacturers and converters
 Tri-pack operates the largest undertaking of BOPP in
Pakistan and owns majority of the market share when it
comes to BOPP and CPP
 Pakistan has a very strong export presence in the BOPP
space and having a southern presence helps with
boosting market share
Key Comments

8.
MACPAC Films Limited
Appendix: Duty Structures
Raw Material Basic Duty Additional Duty Total Duty
Homopolymer 3% 0% 3%
Copolymer 3% 0% 3%
Masterbatch 3% 0% 3%
Duties Taxes
Product Basic Add. Regulatory Total Sales Income
BOPP Films 20% 6% - 27% 17% 11%
CPP Films 20% 6% - 27% 17% 11%
BOPET Films 20% 6% - 27% 17% 11%
Duty Structure Overview
 MACPAC’s key competition is with local products only as the government duties on the import of finished
products has rendered them uncompetitive, however in case the capacity additions are not brought online
many consumers will be forced to import packaging material at exorbitant import rates
 Pakistan imports roughly USD 750 million of raw polypropylene polymers, which are subject to a lower duty
structure of 3% compared to the 27% of the finished goods
 The incumbent government in Pakistan inheriting a skyrocketing current account deficit has undertaken
various measures including rapid PKR devaluation, increasing LC margin requirements, as well multiple
bans on imports of non-essential goods.
 These measures especially the import ban can play a positive role on MACPAC and other local producers as
imported goods are already packaged and therefore do not use local BOPP whilst local products do
consume BOPP for their packaging
 In addition, due to the persistent nature of Pakistan’s current account deficit further imposition of detrimental
tariffs are expected to be levied by future governments to curb imports of products
 Although the removal of anti-dumping duties has made a small dent in the import of products, polypropylene
films are in a general shortage globally and therefore its unlikely they’ll make their way to Pakistan any time
soon
Import of BOPP Films Import of Raw Material
Price of Product USD 1,700 / M Ton USD 1,272 / M Ton
Custom Duty – Basic USD 340 / M Ton USD 38.2 / M Ton
Additional Duty USD 122.4 / M Ton -
Regulatory Duty - -
Landed Cost USD 2,162.4 / M Ton USD 1,310.2 / M Ton
Landed Cost (@ PKR 200/$) PKR 432,480 / M Ton PKR 262,040 / M Ton
Processing Cost / M Ton1 - PKR 97,000 / M Ton
Cost Per Ton - Manufactured PKR 432,480 / M Ton PKR 359,040 / M Ton
Price Comparison between Raw Material & Finished Products
Importing finished BOPP films cost ~ 21% more
… before factoring the cost of a rising US Dollar in Pakistan
Finished Product vs. Raw Material – Duties & Taxes
Notes:
1 Processing cost of some form is still present even when importing finished films, as there is substantial logistical cost incurred in transporting them to the end consumer
Source: MACPAC Management, Ministry of Finance & Federal Bureau of Revenue