PACRA Maintains Entity Ratings of Tufail Chemical Industries Limited

Tufail Chemical Industries Limited (‘TCIL’ or ‘the Company’) is primarily engaged in the production and sale of specialized chemicals in Pakistan. The ratings reflect TCIL’s leading position in domestic manufacturing of surfactants (key raw material for detergents & shampoo industry) and strong customer base – with a mix of local and multi-national companies (MNCs). In FY24, the Tufail family undertook a restructuring of the group, and the two brothers divided the family business. Zubair family and Pervaiz family will now lead separate entities: TCIL and TMIL (Tufail Multichem Industries Pvt. Limited), respectively. TCIL’s current annual production capacity stands at ~53,838MT for LABSA, ~17,763MT for SLS/SLES, and ~43,796MT for textile chemicals. The outlook for the chemical sector, particularly in LABSA, SLES, and textile-related chemicals, remains stable, supported by consistent demand from fast-moving consumer goods (FMCG) segments such as detergents, personal care, and textiles. Local manufacturers are gradually expanding capacities to reduce reliance on imports, meet growing domestic demand, and tap into regional export opportunities. While the sector continues to face challenges, including fluctuations in raw material prices and energy costs, it has shown notable resilience. The Company is well positioned within this landscape, backed by its established market presence, diversified product portfolio, and ongoing focus on innovation and process enhancement aimed at improving operational efficiency and responsiveness to customer needs. During 9MFY25 the Company’s net sales stood at ~PKR 9,233mln and reflecting an annualized growth of ~40% as compared to FY24 ~PKR 8,769mln. This growth was primarily driven by an ~18% increase in sale volumes and upward price adjustments. However, margins diluted across all levels, mainly due to elevated raw material and energy costs which could not be fully passed on to customers. Tufail Chemical Industries Limited’s governance framework reflects limited independent oversight, as the Board primarily comprises close family members, indicating an area for potential improvement. The formal establishment of an internal audit function would further enhance the Company’s control environment. Going forward, the Company plans to improve operational efficiency and sustainability through infrastructure upgrades, solar energy integration, and plant optimization. In addition, two major projects are currently in the implementation phase: electricity generation from sulphuric acid plant steam and installation of an RO water plant to fulfill the plant’s complete water requirements, both of which are expected to become operational soon. These initiatives are expected to be financed through a mix of equity and debt. The financial risk profile is marked by modest coverage ratios, cash flow generation and stretched working capital cycle. The capital structure is leveraged, with borrowings comprising long-term facilities to support CAPEX and short-term lines utilized for working capital requirements.
The ratings are dependent on the Company’s ability to sustain its market position. Furthermore, sustained growth in revenues, and improvement in margins, as depicted in financial projections shall remain imperative.

About the Entity
Tufail Chemical Industries Limited was incorporated in 1993 and commenced operations in 1995 as a public unlisted company. It is a family-owned and managed business, with the entire shareholding held within the Zubair family. As per the proposed structure, 45% of the shares are held by Mr. Zubair Farid Tufail, 25% by Mr. Salman Tufail, and 10% each by Mrs. Ghazala Zubair, Ms. Fariha Nasir, and Syed Azfar Ali Nasir. Mr. Zubair Tufail serves as the Chairman of the Board, which is comprised entirely of his close family members.