Tufail Chemical Industries Limited (hereinafter referred to as 'TCIL' or 'the Company') was incorporated in 1993 under the Companies Act and commenced commercial operations in 1995. The Company is registered as a public unlisted company. Its principal business address is located in Karachi, Sindh, Pakistan.The Company does not form part of a formal holding structure; however, it operates within the broader Tufail family business ecosystem. Following a group-level restructuring completed during FY24, the Company now operates as an independent entity under the Zubair family, separately from Tufail Multichem Industries Private Limited which is led by the Pervaiz family.

The Tufail family's commercial history in chemicals predates the incorporation of TCIL and traces its roots to chemical trading activities. The family leveraged its distribution network to transition into manufacturing and formally incorporated TCIL in 1993, with production commencing in 1995. The growth trajectory of the Company has been predominantly organic, built on progressive expansion of manufacturing capacity in surfactants and specialty chemicals. A structurally significant corporate event occurred in FY24 when the two branches of the Tufail family undertook a formal division of the group's businesses. Under this restructuring, the Zubair family retained TCIL while the Pervaiz family assumed control of the separately constituted entity, Tufail Multichem Industries Private Limited. This restructuring resulted in a realignment of assets, related party exposures, and borrowing obligations that is visible in the Company's financial position across review periods. Prior to the restructuring, related party exposures on both the asset and liability sides were material; as of the year ended 30 June 2024.

The Company is principally engaged in the manufacturing and sale of specialty chemicals, primarily anionic surfactants, including Linear Alkyl Benzene Sulphonic Acid (LABSA), Sodium Lauryl Ether Sulphate (SLES), and others. These products serve as key raw materials for the detergent, personal care, home care, and textile processing industries. The Company's production process is dependent on imported raw materials, particularly Linear Alkyl Benzene (LAB), exposing operations to international commodity price volatility and foreign exchange fluctuations. TCIL has established long-standing relationships with leading FMCG manufacturers, industrial customers, and distributors, supported by a well-developed distribution network and technical expertise. The Company's cumulative installed production capacity stands at ~115,397 metric tons per annum. Its power requirement of approximately 1.3MW is primarily met through the national grid (K-Electric), supplemented by an installed 800kW solar power system, while diesel generators serve as a backup source to ensure uninterrupted operations. The operational strategy remains focused on maintaining high product quality, optimizing capacity utilization, enhancing manufacturing efficiencies, and expanding its customer base through product diversification and export market penetration

Tufail Chemical Industries is a family-owned and managed business. The Company's shareholding is concentrated within the sponsoring family, with Mr. Zubair Farid Tufail holding the majority stake of ~51%. The remaining shareholding is distributed as follows: ~20% held by Mrs. Ghazala Zubair, ~20% by Mr. Salman Tufail, ~4.5% by Mr. Syed Azfar Ali Nasir, and ~4.5% by Mrs. Fariha Nasir.

The ownership structure demonstrates a high degree of concentration, with effective control vested in Mr. Zubair Farid Tufail, who also serves as Chairman and Chief Executive Officer. The unified shareholding within the family eliminates the risk of hostile ownership transitions or inter-shareholder disputes from external parties. The involvement of the second generation is already evident through active participation in executive management, including representation at the level of Executive Director, which provides a degree of continuity in leadership succession.

Mr. Zubair Farid Tufail has about six decades of experience in the chemical industry. He transformed the family's trading enterprise into one of Pakistan's largest surfactant manufacturing operations, demonstrating the ability to identify and execute a strategic transition from distribution to manufacturing over a sustained period. His standing in the broader business community is evidenced by his election as President of the Pakistan Chamber of Commerce and Industry for 2017. The family has further diversified its commercial interests through various ventures, reflecting a willingness to explore adjacent business opportunities beyond the core chemicals segment.

The Tufail family's collective net worth is reported at over ~PKR 1.4 billion, which provides a measure of financial capacity to support the Company under stress conditions if required. The family's financial interests span the chemicals manufacturing business under TCIL along with ventures in various other sectors. The financial strength of the sponsoring family is considered adequate relative to the Company's scale of operations.

The Board of Directors comprises three members, all of whom are drawn from the Tufail family. The board composition is entirely executive in character, with no non-executive or independent directors currently in place. Mr. Zubair Farid Tufail serves concurrently as Chairman and Chief Executive Officer, meaning the roles of board chair and executive management head are not separated. The remaining two directors, Mrs. Ghazala Zubair and Mr. Salman Tufail, also hold executive positions within the Company. The board does not have independent oversight representation. The Company has indicated its intention to induct independent directors in the near future, which, if executed, would meaningfully strengthen the governance framework. No formally constituted board committees such as an Audit Committee or Human Resource and Remuneration Committee have been disclosed in the available information.

Mr. Zubair Farid Tufail, Chairman and Chief Executive Officer, holds a graduate degree and brings over six decades of cumulative experience in the chemical industry. His tenure spans both the trading and manufacturing phases of the Company's development, and he has been the primary driver of the Company's strategic direction and operational growth. He has also served in a representational capacity for the broader business community as President of the Pakistan Chamber of Commerce and Industry. Mrs. Ghazala Zubair serves as an executive director and is the spouse of the Chairman, contributing to the family-led governance model. Mr. Salman Tufail also serves as an executive director and represents the second generation of the Tufail family in the business, with active participation at the executive level. The board's collective skill base is concentrated in chemical industry operations and business management, with limited diversity in terms of independent financial, legal, or sector-specialist expertise.

During FY25, members' attendance remained strong, and meeting minutes were formally documented. The Company's board is dominated by family members with no independent oversight. However, the Company is planning to induct independent directors in the near future.

M/S Naveed Zafar Ashfaq Jaffery & Co. are the external auditors of the Company. The auditor is listed in Category “A” of the SBP's panel of auditors and expressed an unqualified opinion on the Company’s financial statements for the period ended June 30th, 2025.

The Company operates through five functional departments, each headed by an experienced Head of Department. All departmental heads report directly to the Chief Executive Officer, Mr. Zubair Farid Tufail, who maintains direct oversight of day-to-day operations. The organisational model is centralised, with strategic and operational decisions concentrated at the CEO level. This structure reflects the family-managed nature of the enterprise and is consistent with its size and operational complexity. The delegation of authority framework is accordingly top-down, with functional autonomy at the departmental level operating within parameters set by senior leadership.

Tufail Chemical Industries Limited is led by a seasoned management team possessing extensive industry knowledge and operational expertise. The Company is headed by its Chairman and CEO, Mr. Zubair Farid Tufail, who provides strategic direction and oversees overall business operations. He is supported by an experienced senior management team, including Mr. Asif Aziz, Chief Financial Officer, who brings over 36 years of experience in finance and corporate management, and Mr. Salman Tufail, Director – Procurement & New Projects, who possesses more than 22 years of experience in procurement, project execution, and operational management. Collectively, the management team has played a pivotal role in strengthening the Company's market position, enhancing operational efficiencies, and driving its long-term strategic objectives.

The Company’s production facility is equipped with multiple quality control labs with real-time surveillance by the Director of Technical Operations to ensure optimal monitoring. The key management personnel meet on a weekly and monthly basis to proactively address operational issues.

The Company implemented ER Manager in 2012 as an ERP solution having 15 modules that can be mixed and matched as per business needs. The Company successfully upgraded its ERP by implementing the latest version of SAP which went live in May 2020.

The Company has in place a European automated system to control & monitor the Sulphonation process. Moreover, filling area surveillance is done through a dedicated system. The production details related to yield & quality for each product are shared with the senior management on a real-time basis.

Pakistan's Linear Alkyl Benzene Sulphonic Acid (LABSA) and Sodium Lauryl Ether Sulphate (SLES) industry is characterised by a concentrated market structure, with four organized manufacturers—Tufail Chemical Industries Limited (TCIL), Tufail Multichem Industries Limited (TMIL), Ittehad Chemicals, and Colgate-Palmolive's captive facility, accounting for an estimated annual LABSA production capacity of ~148,000 MT. Domestic SLES production is led primarily by TCIL and TMIL. Industry capacity utilisation is estimated at 75%–90%, translating into annual LABSA production of ~111,000–133,000 MT, reflecting adequate domestic manufacturing capacity with moderate spare headroom. Demand for LABSA and SLES is primarily driven by the detergent, household cleaning, and personal care industries, while textile processing represents a secondary end-use segment. The industry remains heavily dependent on imported Linear Alkyl Benzene (LAB), the principal feedstock for LABSA, exposing manufacturers to foreign exchange volatility, fluctuations in global petrochemical prices, and changes in freight costs. During FY26, disruptions to Middle Eastern supply chains and elevated shipping costs resulted in higher landed costs for domestic producers, placing pressure on input costs and margins. Furthermore, the expiry of anti dumping duties on imported LABSA in January 2026 is expected to increase competitive intensity, particularly from regional suppliers including China, India, Indonesia, Iran, and South Korea. While SLES is relatively less exposed to import competition due to domestic production capabilities and customer-specific formulations, pricing across both products remains closely linked to international feedstock prices and exchange rate movements. Going forward, industry growth is expected to remain underpinned by favourable demographic trends and sustained demand from downstream consumer sectors. Nevertheless, manufacturers' profitability is likely to remain sensitive to raw material price volatility, currency depreciation, import competition, and the industry's continued reliance on imported feedstock.

TCIL occupies a well-established position within Pakistan's surfactants segment and operates the country's largest dedicated surfactant manufacturing facility with a cumulative installed capacity of ~115,397 metric tons. The Company is ranked among the top five chemical manufacturers in Pakistan by revenue and maintains direct commercial relationships with leading FMCG multinationals including Procter and Gamble Pakistan, Unilever Pakistan, and Colgate Palmolive, which provides a degree of demand visibility and pricing stability that smaller competitors cannot easily replicate. The principal domestic competitor in the surfactants space is Tufail Multichem Industries Private Limited, which, following the FY24 family restructuring, now operates as a separate entity with a production capacity exceeding ~100,000 metric tons. Ittehad Chemicals Limited, another publicly rated peer, maintains an annual production capacity of ~70,000 metric tons for LABSA and SLES. TCIL's competitive strengths reside in its scale, established client relationships, diversified product portfolio spanning LABSA, SLS/SLES, and textile chemicals, and its track record of supplying to quality-sensitive multinational buyers. These advantages are structural to the extent that replicating the client credibility and operational scale of TCIL would require significant time and capital investment by a new entrant.

The Company's revenue declined by ~2.3%, standing at PKR 9,016mln during 9MFY26 (9MFY25: PKR 9,233mln) (FY25: PKR 12,152mln; FY24: PKR 8,769mln). Sales remained predominantly local, with the local market contributing ~99% of total revenue, while exports accounted for the remaining ~1%. During 9MFY26, the Company sold ~40mln units. On a quantity basis, the major contributors were Sulphuric Acid 98% (~36%), Sulphonic Acid 96% (~31.7%), and SLES 2 Mole (~5.4%). In value terms, Sulphonic Acid 96% remained the largest revenue contributor, accounting for ~57.7% of total revenue, followed by SLES 2 Mole, reflecting the relatively higher value addition of these products compared to the Company's other offerings.

Margins remained largely stable during 9MFY26, with the gross profit margin recorded at ~12.3% (FY25: ~12.4%; FY24: ~14.2%). The resilience in gross margins reflects the Company's ability to effectively pass on fluctuations in raw material costs while maintaining pricing discipline. At the operating level, the margin moderated slightly to ~6.1% during 9MFY26 from ~6.6% in FY25, primarily reflecting higher operating expenses. Consequently, the Company reported a profit after tax of PKR 112mln during 9MFY26 (FY25: PKR 148mln). Nevertheless, the net profit margin remained stable at ~1.2%, in line with FY25, underscoring the Company's ability to preserve overall profitability despite a challenging operating environment.

TCIL places significant emphasis on research and development, enabling it to develop a diversified portfolio of specialised surfactant variants tailored to specific customer requirements. This product innovation capability has strengthened the Company's competitive positioning and fostered long-standing relationships with a niche customer base comprising predominantly multinational corporations (MNCs), resulting in a stable order pipeline and recurring business.

The Company's working capital cycle remained stretched during 9MFY26, with gross working capital days increasing to 127 days (FY25: 120 days; FY24: 111 days). The deterioration was primarily attributable to a buildup in trade receivables, which rose to 85 days from 70 days in FY25, reflecting an extended collection cycle and a higher level of funds tied up in operations. Conversely, inventory days improved to 43 days (FY25: 50 days; FY24: 55 days), indicating relatively efficient inventory management; however, the improvement was insufficient to offset the pressure arising from slower receivable recoveries. Consequently, net working capital days remained elevated at 103 days (FY25: 103 days; FY24: 81 days), underscoring the Company's continued reliance on external financing to support its operating cycle. Trade payable days increased to 24 days (FY25: 17 days), providing additional supplier financing and partially mitigating working capital requirements. Nevertheless, the overall working capital position remained stretched, constraining liquidity flexibility and increasing dependence on short-term borrowings, particularly in a relatively high interest rate environment.

Coverage metrics improved during 9MFY26, with FCFO-to-finance cost increasing to 1.7x (FY25: 1.5x; FY24: 1.6x). The improvement was primarily driven by a reduction in finance costs, which declined to PKR 314mln during 9MFY26 (FY25: PKR 471mln), largely attributable to the lower policy rate environment. Although FCFO remained broadly stable during the period, the lower financing burden supported an improvement in the Company's debt servicing capacity.

Total borrowings stood at PKR 3,622mln during 9MFY26, reflecting a 7.6% decline from PKR 3,921mln in FY25 (FY24: PKR 3,173mln). The borrowing profile remained predominantly short-term, with short-term facilities accounting for ~97.6% of total borrowings, primarily to finance the Company's working capital requirements. Consequently, the leverage ratio improved modestly to ~56.4% during 9MFY26 (FY25: ~58.6%; FY24: ~55.3%), supported by lower debt levels. The Company's equity base stood at PKR 2,801mln as at end-9MFY26, providing adequate support to its capital structure.