Descon Oxychem Limited (hereinafter referred to as “Descon Oxychem” or “the Company”) is a public listed entity incorporated under the Companies Ordinance, 1984 (now “Companies Act, 2017”). Its registered office is located at 18-KM Ferozepur Road, Lahore.

Descon Oxychem was incorporated as a private limited company in 2004 and was listed on September 15, 2008. It is a project of the Descon Group. The Company is a subsidiary of DEL Chemicals (Private) Limited (the parent company), an unlisted private company incorporated in Pakistan. Following commissioning in October 2008, the Company’s plant started commercial production in March 2009. The Company has also incorporated a wholly owned subsidiary, “Descon Oxychem FZE” in Hamriyah Free Zone, Sharjah, UAE, that is engaged in import, export, and trading of chemicals & related products, detergents & disinfectants, water treatment & purification chemicals, and raw materials.

The prime business of Descon Oxychem is the manufacturing & distribution of Hydrogen Peroxide (HPO) of up to 60% concentration. Descon Oxychem has launched its brands for different grades of Hydrogen Peroxide with different concentration levels including: i) Technical Grade, ii) Aseptic Grade, and iii) Food Grade. Its production facility is located at 18-KM Lahore Sheikhupura Road, consisting of an HPO plant with a capacity of ~42,000 MT per annum at ~100% concentration and a Hydrogen plant. The Hydrogen plant, is capable of producing hydrogen sufficient for two-fold expansion of HPO facility. Descon Oxychem has technical collaboration with Chematur Engineering Sweden, a well-known engineering firm that has delivered more than 1,100 different chemical industrial plants worldwide. It has provided detailed engineering for construction of HPO plant to Descon Engineering Limited (Flagship Company of the Descon Group) and assisted in the plant’s commissioning.

The principal sponsor of Descon Oxychem holds a majority shareholding of ~72.63% through associated companies while the remaining ~27.37% stake rests with the financial institutions and the general public. 

The transfer of the Company's ownership to a holding company provides clarity to Descon Oxychem’s ownership structure, boding well for its stability.

Originating from Pakistan, the Descon Group has, over the years, expanded its horizons to Abu Dhabi, Saudi Arabia, Qatar, Oman and Egypt. With presence in the chemical sector since 1980, Descon Oxychem is well placed to benefit from the Group’s technical knowledge, vast distribution network and established relationship with clients. Mr. Abdul Razak Dawood, former Advisor to Ex-Prime Minister Imran Khan for Commerce, Textile, Industry and Production of Pakistan, was founder and former Chairman of the Descon Group. Now, Mr. Taimur Dawood, son of Mr. Abdul Razak Dawood, leads the Group. The Dawoods are one of the well-known business families of the country and known for their business acumen.

Descon Group has expanded its footing in diversified business avenues with a sizable portfolio of strategic investments, enhancing the Group’s financial strength. Its business portfolio spans across various sectors including engineering, power and chemicals. The Group aims for sustainable profitability of its business ventures while expanding its outreach globally through timely exploitation of business opportunities. The Group has shown willingness and ability to support the Group companies in times of need. 

The Company’s board comprises eight members including five non-executive, two independent directors, and one executive who also serves as the CEO. Descon Oxychem's board structure is considered strong.

Descon Oxychem’s board comprises highly qualified members and has a blend of business studies, engineering, and finance professionals. The Chairman, Mr. Faisal Dawood holds a Bachelors degree in Materials Science and Engineering from Cornwell University and an MBA from Columbia University. He has served at multiple management positions within the engineering and chemical divisions of the Descon Group and currently also serves as the Vice-Chairman of Descon Engineering. Furthermore, Mr. Taimur Dawood has over 20 years of diversified experience in engineering, product marketing, project finance, strategy development and implementation and mergers and acquisitions. He is serving as Chairman of other Descon Group companies including Descon Engineering Limited and Descon Power Solutions (Pvt.) Limited. He is also the Managing Director of Gray Mackenzie Engineering Services BV, the Netherlands. From 2001 to 2011, Mr. Taimur served as the CEO of Descon Chemicals. The other directors of the Company hold senior positions in associated companies and serve on the Boards of other Group companies. They further strengthen the Board with their diverse professional backgrounds and extensive expertise.

Meeting agendas provided to Board members and documentation of meeting minutes remain strong. The Board further ensures effective governance through four committees, namely: i) Enterprise Risk Management Committee, ii) Audit Committee, iii) Human Resource & Remuneration Committee and iv) Compliance Committee. The Audit Committee is chaired by a non-executive Director. The Board also ensures strong monitoring and control through monthly meetings with management – conducted by nominated Board members. Prior to this meeting, MIS reports are sent to all Board members and a thorough discussion is held on key performance areas. This bodes well for the Board’s effectiveness.

M/s Crowe Hussain Chaudhury & Co., listed in Category “A” of the State Bank’s panel of auditors, is the external auditor of the Company. The auditors have reviewed the Company’s financial statements for the period ended December 31, 2024. Meanwhile, public disclosures remain strong. The Company has outsourced its internal audit function to KPMG Taseer Hadi & Co., also listed in Category “A” of the State Bank’s panel of auditors.

The Company operates through seven functional departments, each headed by an experienced manager. The departments include: i) Plant Management, ii) Investments, iii) Marketing & Sales – North & South, iv) Finance & Accounts, v) Human Resource, vi) Quality & Assurance and vii) Sourcing & Planning. All departmentheads/managers’ report directly to the CEO. In order to rationalize costs some business functions (IT, HR and Accounting & Finance) are shared at Group level. Currently, all key positions within the organization are fully staffed, reflecting the Company’s commitment to maintaining a robust and efficient workforce.

Mr. Muhammad Mohsin Zia is currently serving as the CEO of Descon Oxychem. Mr. Mohsin was appointed during April, 2021. He brings with him 28 years of diverse experience in Marketing Services, Business Development, Sales Management, Supply Chain Management and Strategy, development. Previously, Mr. Mohsin was working as General Manager & BU Head Pakistan- Construction Chemicals at BASF Pakistan. Mr. Mohsin has also worked at various other roles like Head of Supply Chain, Business Unit Head & Deputy Head of Operations for South Asia, and Head of Corporate Strategy and has got extensive exposure in Strategy Development, Marketing & Sales, Business Development Projects, & New Venture Planning and Development. He holds an MBA degree from Institute of Business Administration, Karachi. He is assisted by a team of  experienced and seasoned professionals including the CFO, Ms. Rabia Shoaib, a qualified Chartered Accountant and joined the Descon Group in 2022. With over 18 years of experience across multiple finance domains, she brings expertise in project control, stakeholder management, and financial operations.

Descon Oxychem’s senior management receives daily performance reports of the plant’s operations which results in optimal monitoring. While there are no formal management committees, key management personnel meet on daily and weekly basis to discuss key issues. Furthermore, there are regular need-based meetings for discussion of issues.

The Company has implemented R12 version of the Oracle E-business suite application, which is also used at other associated companies of Descon. The ERP solution is capable of generating various MIS related to production, inventory management, sales and trade receivables/payables. Oracle Financials, Manufacturing and Projects modules have been completely implemented. The implementation of the ERP system further strengthens the control environment of the Company due to in-built controls of the system, in addition to better reporting and increased efficiency due to automation of the business processes.

Hydrogen peroxide (H2O2) is a relatively new product for the domestic chemical sector and owing to the initial setup arrangements with Chematur Engineering, Sweden; the technical specifications of Descon Oxychem’s plant are sound. Regular visits by Chematur’s staff also ensure efficient capacity utilization and quality of final product. Descon Oxychem has been given the license to be sole operator of Chematur technology in Pakistan. The plant is highly automated and is operated by DCS (Digital Control System). It assists management in controlling and monitoring the production process and chemical levels. To improve operational reliability Descon Oxychem has built organizational capacity by implementing Quality hygiene Safety Model and Reliability Centre Management. Introduction of Reliability Centre Management has changed the perspective of Company’s operation from fix it culture to run it culture. This culture has helped Descon Oxychem to improve plant reliability significantly.

Pakistan’s HPO industry presently consists of two players: i) Descon Oxychem & ii) Sitara Peroxide, each with an installed capacity of ~42,000MT & ~30,000MT, respectively (at 50pc concentration). However, the Sitara Peroxide plant remained shut down from October 20, 2022 to March 02, 2023 and then again from June 12, 2023 to date. Currently, the domestic demand outstrips the supply and ~20% of local demand is met through imports. Major consumer of HPO is the textile industry, accounting for more than 3/4 of the total domestic demand (70%); this is followed by the mining, paper & board, & food industries. Going forward, Engro Peroxide's HPO plant intends to enter the market with ~28,000MT capacity (at 50pc concentration). Anti-dumping is installed on imports based on foreign manufacturers selling products at significantly lower margins/loss to make the business less sustainable for local players. This is necessary to protect foreign exchange reserves and encourage local industry.

Currently, Descon Oxychem holds a dominant market share exceeding 50% in the HPO sector. However, the recent commissioning of Engro's new plant is anticipated to reshape market share dynamics, particularly in the South region. Despite this increased competition, Descon Oxychem's strong customer base, ongoing expansions, and pursuit of new opportunities position it to likely maintain its leading role in the industry. 

The Company derives its revenues principally from local sales (~99%) which is predominant to the textile sector for bleaching & dyeing purposes while the remaining minor portion of sales is made to mining & food sector consumers. During 1HFY25, the top line of the Company has shown a growth of ~11.4% YoY and clocked in at ~PKR 3,197mln (FY24: PKR 5,738mln, FY23: PKR 6,721mln, FY22: ~PKR 4,250mln). This growth is primarily attributed to a volumetric increase.

The Company’s gross margin showed a significant improvement in 1HFY25 and reported at ~32.0% (FY24: ~20.1%, FY23: ~41.0%). The same translated into a increased operating profit margin (1HFY25: ~25.6%, FY24: ~13.4%, FY23: ~35.3%). Finance cost decreased to PKR 5mln in 1HFY25 from PKR 24mln in FY24. Subsequently, the net margin improved and stood at ~15.5% during 1HFY25 (FY24: ~8.8%, FY23: 20.8%).

Descon Oxychem regularly invests in BMR. Optimal capacity utilization is of utmost importance to manage costs & sustain high margins. Efforts to penetrate new market segments have been successfully implemented alongside organic growth in the Textile, Mining & Food sectors. The company is also exploring other options to diversify into downstream products which will further strengthen the usage of HPO in the local market.

Descon Oxychem’s cash cycle remains robust as nearly all sales are on a cash basis while the Company is offered a credit period of ~90 days by its sourcing partners. Over the period, working capital cycle has stretched over the years which is evident from the gross cash cycle (1HFY25: ~47 days, FY24: ~54 days, FY23: ~37 days) and the net cash cycle reached ~39 days in 1HFY25 (FY24: ~38 days, FY23: ~15 days).

The Company’s FCFO clocked in at PKR 873mln in 1HFY25 owing to improved profitability. Consequently, interest coverage ratio improved (1HFY25: ~300.7x, FY24: ~70.7x, FY23: ~235.1x). Its debt coverage ratio also significantly improved in 1HFY25 and recorded at ~49.3x (FY24: ~2.8x, FY23: ~38.0x). 

Descon Oxychem’s leveraging has decreased significantly over the years. During FY21, the Company obtained a long-term loan for the expansion project. Accordingly, leveraging increased to ~36.7% in FY21. However, the same had been reduced to ~13.4% during FY22 and 7.9% during FY23. As at end Dec-24, leveraging further improved to ~5.7%. Long-term loan makes ~51% of the total debt of the Company.