Press Release
VIS Maintains Entity Ratings of Power Chemical Industries Limited
Karachi, June 24, 2025: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Power Chemical Industries Limited (“PCIL” 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 June 24, 2024.
PCIL started as a small manufacturing unit of dry powdered glue back in 1977, which over the years developed into an organized setup offering various chemical products. The Company is primarily involved in manufacturing and sale of diverse chemical product portfolio, including paint and coating chemicals, plasticizers, adhesives, and textile chemicals.
The assigned ratings incorporate the business risk profile of PCIL, which operates in Pakistan’s chemical manufacturing sector, primarily catering to the paints and coatings market. The business risk is considered moderate, reflecting sector-wide reliance on imported raw materials, demand linkages with the construction and industrial segments, and competitive pressures from both formal and informal market players. Within this landscape, PCIL maintains a notable presence in the coating chemicals segment, which has significantly less competitive environment, with fewer players allowing for greater pricing power, compared to the chemical industry as a whole. Ratings of the Company are further supported by a stable client base consisting of long-standing relationships with leading industry players. PCIL benefits from interchangeable production capacity and continues to serve a demand base supported by downstream sector stability.
Assigned ratings also consider the financial risk profile of the Company. PCIL has reported consistent revenue growth in the past five years, mostly supported by price adjustments. Due to the constrained economic environment, overall revenue growth has been limited in recent years. The Company’s capitalization profile has historically remained stable; however, financing has been skewed more towards non-debt liabilities, reflected in a elevated leverage but manageable gearing ratios. Nevertheless, due to an inventory build up in FY24, leverage and gearing peaked to their highest levels since FY21 before normalizing in 1QFY25. Inventory buildup was due to receipt of delayed shipments linked to international supply chain disruptions from geopolitical uncertainties. Liquidity indicators remained sound. Coverage metrics, while lower due to increased debt levels in a high-interest rate environment, remained sufficient over the review period.
Going forward, any rating movement will be predicated on the company’s ability to strengthen core financial metrics while maintaining its market position. In particular, sustained improvement in profitability and the preservation of capitalization indicators will remain key considerations in the rating assessment.
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