PACRA Maintains Entity Ratings of Tufail Chemical Industries Limited

Tufail Chemical Industries Limited (“TCIL” or “the Company”) is one of Pakistan's leading manufacturers of specialty chemicals, primarily engaged in the production and sale of surfactants and textile chemicals. The ratings reflect the Company's strong position in the domestic surfactants industry, underpinned by its diversified product portfolio, established relationships with multinational and local customers, and significant manufacturing scale. TCIL's current annual production capacity stands at ~53,838 MT for LABSA/SLES and 43,796 MT for textile chemicals. Pakistan's LABSA and SLES industry is characterized by a concentrated market structure, with four organized manufacturers accounting for an estimated annual LABSA production capacity of ~148,000 MT, while domestic SLES production is primarily led by TCIL and TMIL. Demand is driven mainly by the detergent, household cleaning, and personal care sectors. The industry remains heavily reliant on imported Linear Alkyl Benzene (LAB), exposing manufacturers to foreign exchange movements, global petrochemical price fluctuations, and freight cost volatility. During FY26, elevated input costs arising from regional supply chain disruptions and higher shipping costs exerted pressure on margins, while the expiry of anti-dumping duties on imported LABSA is expected to intensify competition from regional suppliers. Going forward, steady downstream demand is expected to support industry growth, although profitability will remain sensitive to raw material price volatility, exchange rate movements, and import competition. Within this operating environment, the Company remains well positioned, supported by its established market presence, diversified product portfolio, and continued focus on operational excellence. During 9MFY26, net sales stood at ~PKR 9,016mln, representing a slight contraction to 9MFY25 sales of PKR 9,233mln. Though the decline was primarily attributable to lower sales volumes, it was partially offset by favourable price adjustments. Margins remained broadly stable during the period, supported by disciplined pricing and effective cost management despite persistent volatility in raw material prices. The Company's governance framework reflects scope for enhancement in Board independence, given its predominantly family-based composition. The formal establishment of an independent internal audit function would further strengthen the governance and internal control framework. The financial risk profile is characterized by modest coverages and cash flows, while the working capital cycle remains stretched. The capital structure remains leveraged, with short-term facilities utilized to finance working capital requirements. Going forward, the Company aims to further diversify its product portfolio through the introduction of higher value-added specialty chemicals while expanding its export footprint, particularly in the Central Asian Republics. Ongoing capital expenditure, including the installation of a dedicated stripping unit and a new dryer for powder-based products, together with energy-efficiency initiatives, is expected to enhance production capabilities, improve operational efficiency, optimize production costs, and support long-term profitability.
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, the shareholding is as follows; ~51% held by Mr. Zubair Farid Tufail, 20% by Mr. Salman Tufail, ~20% Mrs. Ghazala Zubair, ~4.5% by Ms. Fariha Nasir and ~4.5% by Syed Azfar Ali Nasir. Mr. Zubair Tufail serves as the Chairman of the Board, which is comprised entirely of his close family members.