Premier Industrial Chemical Manufacturing Co. (Private) Limited (‘the Company’) was incorporated in Jun-03 as a private limited company and started operations in 2007.

Premier Group of Industries (‘the Group’) consists of companies operating in the ethanol, paper, and steel sectors. The Group, founded by Sheikh Zahoor Ali (late), started its operations in 1979 with a paper mill. Over the years the second generation of the business diversified the operations by venturing into ethanol and steel segments. The Company was formed in 2003 and started operations in 2007 mainly producing industrial grade ethanol. In 2012, the dairy and juices plant were also added for manufacturing nectar juices, flavored milk, and butter.

The Company is primarily engaged in the manufacturing and sale of industrial grade ethanol, dairy products and juices. Total Annual production capacity is 124,000 M. Tons with with Superfine Ethanol of 96% strength and Fuel grade Ethanol of 99.9%. In CY25, the Company produced 25,416MT of ethanol (CY24: 69,324MT) resulting decrease in capacity utilization of ~20.5% (CY24: 55.9%). Whereas, during Jun’26, capacity utilization stood at 35,000MT resulting in a utilization of ~28.23%. Total power generation stands at 15MW and the Company’s own consumption is 5 MW and surplus is available for the steel plant at commercial rate.

The Company is completely owned by the sponsoring family. Majority shareholding rests with Mr. Zahoor’s sons, Mr. Muhammad Saeed (~20.8%), Mr. Shahid Saeed (~20.8%), and Mr. Tahir Saeed (~20.8%). The remaining shareholding rests with Mrs. Zahra Tahir (~12.5%), Mrs. Shireen Shahid (~12.5%), and Mr. Muhammad Saeed’s sons, Mr. Ahsen Ali (~5.5%), Mr. Asad Ali (~5.5%), and Mr. Turab Ali (~1.5%).

The ownership structure is considered stable, with the presence of a formal succession plan further strengthening the continuity and stability of the ownership framework.

The sponsors demonstrate adequate business acumen through their diversified Group interests across the ethanol, paper, and steel sectors.

The Company benefits from adequate financial strength, underpinned by its Group’s support and the sponsors’ backing.

Board of Directors comprises five members including the Chairman, who is also the CEO, and four Executive-Directors. The board is dominated by the sponsoring family and lacks independent oversight indicating room for improvement.

Mr. Muhammad Saeed, acts as the Chairman of the Board. He has over 32 years of industrial experience in Paper and Ethanol sectors and has been associated with the Company since inception.

The Board convenes on a need basis, while no formal sub-committees have been constituted.

External Auditors of the Company, Crowe Hussain Chaudhary & Co. Chartered Accountants have expressed an unqualified opinion on financial statements for CY25. The firm has been categorized in category ‘A’ by SBP and has been QCR rated by ICAP.

The Company’s organizational structure has been optimized as per the operations. The Company operates through Finance, Sales & Marketing, Production, and Admin & HR. The functions of finance and production are headed by Directors along with departmental heads. Ultimate reporting lines rest with the CEO, who makes pertinent decisions of the Company.

The Company’s management comprises experienced and qualified individuals. Mr. Muhammad Saeed, the Chief Executive Officer, is a graduate and has been associated with the Company since inception. He has more than 32 years of experience in the ethanol and paper segments. Director, Mr. Shahid Saeed, has over 27 years of experience in the paper and juices sectors and heads the Company’s dairy and juices segment.

The Company has no management committees in place. However, performance is discussed among management on a frequent basis to review activity.

The Company has deployed ERP software from Cosmosoft. Reports are generated on daily basis for the management.

The Company has outsourced its internal audit function to Saim & Co. Chartered Accountants.

Pakistan’s sugar sector witnessed a notable improvement in cane availability during FY25-26, with sugarcane production increasing to 89.4 million MT from 84.2 million MT in FY24-25, representing a growth of around 6.2% with further growth projected to 90.0 million MT in FY26- 27. The increase was supported primarily by a higher area under cultivation, which rose by 1.8% to approximately 1.19 million hectares and is estimated at 1.22 million hectares by FY26-27, while per-hectare yield also improved from 70.61 MT/ha in FY24-25 to 73.24 MT/ha in FY25-26, reflecting a 3.7% improvement. Higher cane production, coupled with an improvement in sugar recovery to 9.43% from 9.01%, translated into a significant increase in sugar production, which rose to approximately 7.7 million MT in FY25-26 from 5.8 million MT in FY24-25, representing an exceptional 32.8% increase. As a result, sugar output is projected to reach 8.2 million MT in FY26-27. In addition, carryover stocks of approximately 0.3 million MT provided further support to domestic availability. Against this, national sugar consumption is estimated at around 6.8 million MT in FY25-26, compared with the lower consumption level in the previous year standing at around 6.4 million MT. This resulted in an estimated surplus of approximately 1.1–1.3 million MT. Domestically, retail sugar prices have remained suppressed throughout the review period, with national average prices declining from PKR 168.8/kg in March 2025 to PKR 150.9/kg in March 2026 (a 12% contraction), and more sharply from PKR 184.0/kg in July 2025 to PKR 148.0/kg in July 2026 (a 23% decline). This compression in local prices has been driven by the improved domestic supply environment and greater availability of sugar. Both local retail and export sugar prices have trended downward. On the import side, total sugar imports were recorded at approximately 500,000 MT during the previous year, primarily channeled through the Trading Corporation of Pakistan (TCP), though government discussions are ongoing regarding the prioritization of this previous year import clearance before pursuing further exports. In the current year, sugar imports stood at nil and discussions are ongoing with the government to allow the export of surplus stocks. Furthermore, the sector is witnessing a gradual emergence of sugar beet as a supplementary feedstock, which contributed approximately 100,000 MT of sugar output in FY26-27, while currently marginal relative to the 7.7 million MT total sugar production. Overall, the combination of higher cane production, improved recovery, carryover stocks and relatively lower consumption level has resulted in a comfortable domestic supply position, keeping prices under pressure and creating a surplus that will need to be managed through exports and inventory adjustments. The co-product ethanol segment, derived from sugar production through distillery operations, experienced divergent price dynamics during the review period. Industrial-grade ethanol, primarily used in manufacturing and non-beverage applications, faced suppressed pricing throughout FY25- 26. Industrial ethanol prices remained under pressure as competing supply sources and weak demand from manufacturing sectors constrained price realization. Conversely, fuel-grade and anhydrous ethanol, specialized grades with applications in automotive fuel blending and chemical manufacturing, commanded premium pricing throughout the period.

The Company has successfully implemented a strategic diversification plan through a capital investment of approximately PKR 7.5 billion to establish a corn-based ethanol production facility. The project is substantially complete, with the new plant having successfully achieved its Commercial Operation Date (COD) in July 2026 and completed trial-run production. The addition of corn-based ethanol is expected to significantly enhance the Company's operational capacity by extending the distillery's operating period from the current six months to approximately eleven months annually. This expansion is expected to strengthen the Company's position in the ethanol segment, improve capacity utilization, and support profitability through greater operational efficiency and diversification of the raw material base.

The Company’s revenue declined significantly by 57.5% YoY, from PKR 16.7bln in CY24 to PKR 7.1bln in CY25, reflecting a notable contraction across its operating segments. The Company operates through two segments, namely Ethanol and Dairy & Juices. The Ethanol segment remained the larger contributor, generating revenue of PKR 4.6bln, representing approximately 64.9% of total revenue, while the Dairy & Juices segment contributed PKR 2.5bln, accounting for the remaining 35.1%. The decline in topline was mainly attributable to lower revenue contribution from the Ethanol segment, which remained exposed to the availability and pricing dynamics of its key raw material, molasses, as well as prevailing conditions in the international ethanol market. The Company's ethanol sales include export as well as local sales. Overall, the revenue mix remained tilted toward ethanol, with the segment contributing nearly two-thirds of total revenue, while Dairy & Juices provided diversification to the Company's revenue base. Going forward, the Company's revenue generation is expected to benefit from the corn-based ethanol facility, which is substantially complete and forms part of the Company's ongoing capacity expansion. Capital work-in-progress stood at PKR 9.0bln as at end-CY25, compared to PKR 1.8bln in CY24, reflecting significant investment toward the expansion. The additional corn-based ethanol capacity is expected to support higher production availability and extend the operating period of the distillery, thereby providing greater scope for revenue generation and reducing the Company's reliance on molasses-based operations.

The Company's overall profitability weakened during CY25, with gross profit declining to PKR 550mln from PKR 1.6bln in CY24, while gross margin contracted to approximately 7.8% from 9.5%. On a segmental basis, the Ethanol segment recorded gross profit of PKR 241mln, against PKR 309mln generated by the Dairy & Juices segment, despite the former contributing a significantly higher share of revenue. The Ethanol segment's gross margin stood at approximately 5.2%, compared with around 12.5% for the Dairy & Juices segment, indicating relatively greater cost pressure within the Ethanol business. At the operating level, the Company moved into an operating loss of PKR 260mln in CY25, compared to an operating profit of PKR 438mln in CY24. The deterioration was further reflected at the bottom line, with the Company reporting a net loss of PKR 1.2bln, compared with a net loss of PKR 471mln in the preceding year. Segment-wise, the Ethanol segment remained the primary drag on overall profitability, recording an operating loss of PKR 404mln, whereas the Dairy & Juices segment generated an operating profit of PKR 144mln. Overall, the Company's profitability remained under pressure during CY25, primarily reflecting the weaker performance of the Ethanol segment and the associated cost burden. This resulted in a further deterioration in net profitability, with the net profit margin worsening to negative 17.4% from negative 2.8% in the previous year.

The company’s sustainability profile is supported by its strategic diversification into corn-based ethanol production, aimed at enhancing capacity utilization and reducing reliance on sugarcane-based molasses.The new plant has successfully achieved its Commercial Operation Date (COD) in July 2026 and completed trial production. The addition of corn-based ethanol is expected to extend the company’s distillery operations from the existing six-month period to approximately eleven months annually, thereby improving plant utilization, strengthening operational continuity, and supporting the company’s long-term business sustainability.

The company’s working capital cycle witnessed a significant elongation during CY25, primarily driven by higher inventory levels. Inventory days increased to 150 days in CY25 from 38 days in CY24, mainly due to a rise in raw material holding from 36 days to 127 days, while finished goods days increased to 23 days from 2 days. Consequently, gross working capital days increased to 151 days from 38 days. This was partly offset by an increase in trade payable days to 31 days from 3 days; however, net working capital days still increased substantially to 120 days from 35 days. Trade receivable days remained negligible at 1 day. The current ratio moderated to 5.3x from 15.4x, while short-term trade leverage deteriorated to negative 48.3% from negative 25.8%, reflecting greater reliance on short-term borrowings. Overall, the higher working capital requirement reflects increased inventory absorption during the period, particularly in raw materials, and remains an area to be monitored for efficient liquidity management.

The company’s coverage profile weakened significantly during CY25, reflecting pressure on cash flow generation and profitability. FCFO declined by 213.6% during the period from PKR 438mln to negative PKR 498mln in the preceding year. Consequently, FCFO-to-finance cost coverage turned negative at 0.7x from 0.5x, partially offsetting due to improvement in finance cost to PKR 761mln from PKR 966mln. Debt payback remained negative at 2.6x, unchanged from the previous year, indicating limited internally generated cash flows available for debt servicing. Liquid cover also weakened substantially to 1.1x from 9.6x, highlighting reduced liquidity headroom against financial obligations. Overall, the company’s coverage metrics remain weak and warrant close monitoring, particularly in view of subdued cash flow generation and elevated working capital requirements.

The company’s capital structure weakened during CY25, with total borrowings increasing significantly to PKR 11.8bln from PKR 5.4bln in CY24. Consequently, leveraging structure increased to 50.5% from 36.2%. The borrowing profile remained heavily skewed towards short-term financing, with short-term borrowings increasing to PKR 11.7bln from PKR 5.3bln and constituting 89.4% of total borrowings, compared with 80.2% previously. Utilization of available short-term borrowing lines also increased to 96.1% from 67.0%, indicating higher reliance on short-term funding. Long-term borrowings remained broadly stable at PKR 80mln compared with PKR 98mln in the previous year. Overall, the increased reliance on short-term borrowings and higher utilization levels have resulted in a more leveraged and short-term-oriented capital structure.