PACRA Maintains Entity Ratings of Premier Industrial Chemical MFG. Co. (Pvt.) Limited.

The ratings reflect Premier Industrial Chemical MFG. Co. (Pvt.) Limited's ('the Company') satisfactory market position, strong financial standing and significant role in the country's ethanol export segment, driven by its substantial production capacity. The Company operates across two key segments: ethanol and juice & dairy, which contribute 85% and 15% to its revenue, respectively. In terms of industry outlook, the area cultivated for sugarcane production in MY23 expanded to approximately 1.3 mln hectares (MY22: approximately 1.2 mln hectares). However, sugarcane production declined to approximately 87.9 mln metric tons (MY22: approximately 88.6 mln metric tons), reflecting a year-over-year decrease of approximately 0.7%. This reduction in production resulted in decreased molasses availability, which has adversely impacted Premier Industrial Chemical MFG. Co. (Pvt.) Limited. Consequently, the Company’s capacity utilization fell to (CY23: 45%, CY22: 60%). To mitigate the impact of reduced molasses availability, the Company is transitioning to corn-based ethanol production, with operations expected to commence in CY25, This strategic diversification is expected to enhance the Company’s financial resilience and strengthen its overall financial health. The Company’s performance has remained resilient, supported by high margins and strong profitability. For the period, sales growth was 37%, with the gross margin improving to 33% (CY22: 24%). The net margin also showed significant improvement, rising to (CY23: 21.9%, CY22: 14.5%),These enhancements reflect notable progress in the Company’s financial metrics. The ratings are also supported by the Company’s affiliation with group entities operating in the paper segment, which provides additional support and strengthens the overall credit profile. The Company’s capital structure is characterized by moderate leverage, with a debt-to-equity ratio of 36% (CY22: 34%), This is complemented by strong coverage metrics and effective management of working capital. The Company’s solid equity base further underpins its financial stability, while the sponsors' willingness to provide ongoing support bodes well for the ratings.
Ratings are dependent on the management’s ability to effectively sustain the improved volumes and margins. Prudent debt and liquidity management is critical for ratings. Any deterioration in coverages and/or drag of high advances extended to group concerns, if any, will adversely impact the ratings. Meanwhile, strengthening governance framework remains imperative for ratings.

About the Entity
Premier Industrial Chemical Manufacturing Co. (Private) Limited (‘the Company’) was incorporated in Jun-03 as a private limited company. The Company is primarily engaged in the manufacturing and sale of food grade ethanol, dairy products, and juices. Total annual production capacity is 124,000 M. Tons with Superfine Ethanol of 96% strength and Fuel grade Ethanol of 99.9% strength comprising of 50,000MT each. The Company is completely owned by the sponsoring family. Mr. Muhammad Saeed, the Chief Executive Officer and Chairman of the Board, and has been associated with the Company since inception. Director, Mr. Shahid Saeed, heads the Company’s dairy and juices segment