Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has maintained its ratings for Tufail Chemical Industries Limited (TCIL) while placing the company under a rating watch, following a significant restructuring involving a split of the family business. The company continues to navigate the challenges of a highly competitive chemical manufacturing sector in Pakistan.

According to The Pakistan Credit Rating Agency Limited, the ratings reflect TCIL’s prominent role in the domestic production of surfactants and a strong customer base primarily consisting of multinational corporations. The recent restructuring, finalized with court orders, has divided the original family business into TCIL, led by the Zubair family, and Tufail Multichem Industries Pvt. Limited (TMIL), managed by the Pervaiz family. This change has adjusted TCIL’s production capacities to approximately 64,788 metric tons for LABSA, 42,340 metric tons for SLS/SLES, and 48,363 metric tons for textile chemicals.

The restructuring has led to a reduction in annual sales but stabilized gross margins at around 14%. The report highlights that TCIL managed to improve its operating and net profits through effective cost control measures and reduced finance costs despite several operational challenges. These included difficulties with establishing letters of credit for importing raw materials, procurement delays due to flooding in the UAE, and internal adjustments to the restructuring process.

Moving forward, PACRA notes that TCIL’s growth will be closely tied to its ability to maintain its market position and realize its financial projections. The company plans to invest in infrastructure enhancements, solar energy, and plant efficiency, along with introducing new products funded through a mix of equity and debt. The agency also pointed out the need for TCIL to establish a formal internal audit department and enhance its board’s independence to improve corporate governance.