Press Release

VIS Maintains Entity Ratings of Ittehad Chemicals Limited

Karachi, March 30, 2023: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Ittehad Chemicals Limited (ICL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. The outlook on the rating has been revised from ‘positive’ to ‘stable’. Previous rating action was announced on February 25, 2022.

The ratings assigned to ICL take into account its eminent position in the Chlor-alkali sector with sizable market share of ~30% and ample experience of sponsors in the industry. The ratings take into account the business risk of the sector, ICL’s performance and its moderate financial risk profile. The business risk of the chemical segment is classified as ‘Medium to Low’ VIS classifies the business risk of the chemical segment as ‘Medium to Low’, characterized by ‘Medium’ cyclicality, ‘Low’ competition, ‘High to Medium’ capital intensity and ‘Medium’ energy sensitivity.

The ratings also factor in ICL’s topline growth and profitability performance. Growth in topline is backed by higher pricing of caustic soda and Linear alkylbenzene sulfonic Acid (LABSA). In addition, diversification in LABSA has provided impetus to the topline over the years and accounted for nearly one-third of the sales mix. While profit margins have improved in the ongoing year, the industry remains exposed to currency volatility given imported raw material content and competitive market forces.

The assigned ratings incorporate ICL’s status as a listed entity and derives comfort from adequate liquidity and comfortable leverage indicators, however, rising cost of electricity and escalation in RLNG prices remains a key challenge. Ratings remain sensitive to sustainability of margins along with maintenance of leverage indicators at comfortable levels.

For further information on this rating announcement, please contact Mr. Hasan Rashid (Ext: 215) or the undersigned (Ext: 207) at (021) 35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates - August 2021

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .