Press Release

VIS Maintains Entity Ratings of Ittehad Chemicals Limited

Karachi, April 29, 2025: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Ittehad Chemicals Limited (“ICL” or “the Company”) at 'A-/A2' (Single A minus/ A Two). Medium to long term rating of 'A-' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings has been changed from Stable to Positive. Previous Rating action was announced on April 02, 2024.

Ittehad Chemicals Limited (“ICL” or “the Company”) is a prominent chemical manufacturer in Pakistan, established in 1991 after the merger of Ittehad Chemicals and Ittehad Pesticides. The Company’s origins trace back to United Chemicals, founded in 1962, nationalized in 1971, and privatized in 1995. Majority ownership rests with the Chemi Group, which also holds interests in chemicals and real estate sectors. ICL operates manufacturing facilities in Kala Shah Kaku with its head office in Lahore, producing caustic soda, liquid chlorine, hydrochloric acid, sodium hypochlorite, calcium chloride, and sodium sulphate. The Company caters primarily to domestic demand, with selective exports to the GCC region. ICL also holds two subsidiaries: ICL Power (Pvt.) Ltd being set up for electricity generation from biomass and Ittehad Salt Processing (Pvt.) Ltd. for salt mining operations.

Assigned ratings incorporate the medium business risk profile of Pakistan’s chemical manufacturing sector, supported by moderate demand cyclicality, high entry barriers due to capital intensity and regulatory compliance, and limited competition. Exposure to energy cost volatility, exchange rate movements, and reliance on imported raw materials remains key consideration, while product and client diversification, along with established relationships in the FMCG sector, provide support to the assigned ratings. Regulatory measures such as anti-dumping duties and environmental compliance requirements, along with investments in renewable energy, also support the Company’s operational outlook.

Positive outlook takes into account Ittehad Chemical Limited’s (ICL) stable financial risk profile even under difficult economic conditions and the ongoing projects that are expected to provide further support to its revenue generation capacity and provide improved operational efficiencies. Assigned ratings also takes into account the Company’s financial risk profile, reflecting stable revenues in FY24 despite lower sales volumes, with focused on local sales accounting for a larger share of total revenue. Gross margins were impacted by elevated input costs and currency depreciation, while limited pricing flexibility constrained the full pass-through of cost increases. Profitability during 1HFY25 showed signs of recovery, supported by easing of input costs, Company’s energy efficiency initiatives and continued pricing adjustments. Moreover, declining interest rates have provided support to the Company’s bottom line. Capital structure metrics improved supported by growth in equity through retained earnings. Liquidity remained adequate, with stable current ratio while and coverage ratios also remained healthy. Future profitability and cash flow generation are expected to benefit from the commissioning of the biomass power project and caustic soda flaker unit, aimed at improving cost efficiency and expanding revenue streams, respectively.

Going forward, ratings will remain sensitive to the Company ability to improve its financial risk profile. Moreover, materialization of benefits from the ongoing projects will also be an important consideration for future reviews.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.


Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .