Hi-Tech Blending (Private) Limited (HTBL or the Company) is a private limited company incorporated in Pakistan on 13 March 2014. The Company is registered and headquartered at 1-A, Danepur Road, GOR-1, Lahore, with its manufacturing and plastic products facility located at 7-KM, Sundar Raiwind Road, Bhai Kot, Lahore. HTBL operates as a wholly owned subsidiary of Hi-Tech Lubricants Limited (HTL), a listed public company on the Pakistan Stock Exchange (PSX) rated A-/A2 (Stable) by VIS Credit Rating Company as at December 2024.

HTBL was established to serve as the manufacturing arm of the broader Hi-Tech Group, fulfilling two principal functions: (i) lubricant blending, packaging and filling operations for parent company HTL's ZIC-branded products, and (ii) polymer manufacturing for the production of plastic bottles, caps, and related components for internal use and third-party customers. The blending plant commenced operations in 2016, initially importing bulk ZIC lubricants from SK Enmove Co., Ltd. (formerly SK Lubricants) of South Korea for packaging locally. A strategic transition commenced in November 2024 when HTBL began blending high-end synthetic ZIC lubricants domestically under a formalized Memorandum of Understanding signed with SK Enmove in June 2024, under which the Korean principal provides additives, formulas, and technical specifications for local production. This shift from finished goods import to bulk blending is a defining development for the entity, significantly altering its cost structure, tariff exposure, and margin profile. The polymer division, launched within HTBL in pursuit of portfolio diversification, manufactures plastic bottles, caps, and injection-moulded parts both for internal consumption and for sale to third-party customers. This segment, while smaller in scale, provides an element of revenue diversification and operational integration within the Group's packaging supply chain.

HTBL's core operating unit is a blending plant and plastic products manufacturing facility spread across approximately 22.3 acres at Bhai Kot, Lahore, with a covered area of approximately 180,839 square feet. The blending division operates across four product lines — bottles (capacity: 14.4 million units per annum), caps (21.2 million units), filling (94.3 million litres), and blending (52.8 million litres capacity, expanded from 30,000 MT at inception).

HTBL is wholly owned by Hi-Tech Lubricants Limited (HTL), its immediate and ultimate parent entity. HTL's shares were held 70.54% by directors and their families, ensuring concentrated family-driven ownership at the holding level. HTBL itself has 130,000,060 ordinary shares of Rs 10 each, fully paid, with 60 shares held in the names of nominees of the holding company for the purpose of meeting statutory minimum shareholder requirements. Two nominee shares previously registered in the names of the late Mr. Muhammad Basit Hassan and the late Mrs. Arifa Shaukat are in the process of transfer to their legal heirs upon completion of associated legal formalities.

The ownership structure has remained stable since the Company’s incorporation, with no material changes in its underlying composition. The wholly owned status under HTL eliminates the risk of fragmented ownership and ensures full alignment of HTBL’s strategic direction with broader Group objectives. While HTL’s concentrated family shareholding reflects a degree of governance concentration at the holding company level, it also supports continuity in strategic vision and management stability at the subsidiary level.

HTBL benefits from the accumulated commercial expertise of the Hi-Tech Group, which has been active in Pakistan's lubricant market for over two decades. Through its relationship with SK Enmove Co., Ltd. holding over 40% of the global Group III/III+ base oil market and supplying ZIC lubricants across 50 countries, HTBL gains access to internationally benchmarked formulations, technical specifications, and quality systems. The transition to local blending deepens this technical partnership and is expected to progressively position HTBL as a potential platform for regional export of ZIC-branded products, opening a new revenue channel beyond domestic lubricant supply.

The financial strength and continued support of HTL remain evident through its modest equity base, which stood at PKR 2.8bln at end-June 2025. HTBL maintains close operational and financial integration with its holding company, reflected through sizeable intra-group business transactions and the historical availability of short-term financial support to manage working capital and liquidity requirements. This demonstrates HTL’s financial capacity and commitment to support the subsidiary, while also reinforcing alignment within the broader Group structure.

The Board of Directors of HTBL comprises five members, all representing the broader Hi-Tech Group, consistent with the Company’s status as a wholly owned and operationally integrated subsidiary. The Board convened once during FY2025 in addition to the Annual General Meeting. While the current composition ensures strong alignment with Group strategy and facilitates centralized decision-making, the absence of independent representation reflects a relatively concentrated governance structure. As the Company continues to expand its operations and engagement with external stakeholders, further strengthening of the governance framework through broader board diversity may support enhanced institutional oversight and governance depth.

Mr. Hassan Tahir serves as Chief Executive Officer of both HTL and HTBL, providing unified leadership across the Group's lubricants and blending operations. With 20 years of experience within the Group, he has overseen the Company's establishment, the construction and commissioning of the Bhai Kot plant, the launch of the polymer segment, and the transition to local blending each representing a material operational milestone. Mr. Muhammad Ali Hassan, Executive Director with 20 years of Group experience, complements the CEO's leadership at the governance and strategic level. The non-executive directors — Uzra Tahir, Sana Sabir, and Amna Zaidi — contribute to the Board through their longstanding association with the Group and diversified exposure across business, administrative, and strategic functions.

Board effectiveness is currently achieved through the close strategic alignment between HTBL and HTL rather than through formal governance mechanisms. The unified CEO structure means that operational and strategic decisions are taken efficiently and with full Group context. Key decisions including capacity expansion to the blending segment, the transition to local blending, the polymer segment launch, and the TERF-funded capital expansion reflect appropriate strategic intent and execution.

HTBL's financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted in Pakistan and the requirements of the Companies Act, 2017. The FY2025 financial statements were audited by Riaz Ahmad & Company, Chartered Accountants a QCR rated firm. The audit opinion is unqualified. The parent company HTL's listed status on PSX imposes additional disclosure and governance requirements at the consolidated level, providing a secondary layer of transparency for HTBL's financial affairs.

HTBL operates under an integrated management structure shared with HTL, with a single CEO overseeing both entities. This shared model enables operational synergies in procurement, production scheduling, and commercial coordination, particularly given that the vast majority of HTBL's lubricant output is sold directly to HTL. The organizational setup includes functional heads across business unit operations, sales, finance, human resources, and compliance.

Hassan Tahir, serving as CEO, brings over two decades of direct Group experience and has played a central role in the key developmental phases of HTBL, contributing to strategic continuity and operational growth. Saeed Ullah Khan Niazi, the Group CFO, is a seasoned finance professional with more than two decades of diversified financial and managerial experience, strengthening the Company’s financial oversight and control environment. Meanwhile, Nouman Ishaq, as Business Unit Head for the Packaging Division, contributes significant operational expertise and supports continuity and execution within the polymer packaging segment.

Management effectiveness at HTBL is supported by experienced leadership and close strategic oversight from the Board and the broader Hi-Tech Group. The Company benefits from a management team comprising seasoned professionals with longstanding industry and Group experience, enabling continuity in operations, informed decision-making, and effective execution of business strategy. Senior management maintains close coordination with the Board, ensuring alignment between operational objectives and Group-level strategic direction.

HTBL operates an ERP platform that provides integration across financial reporting, inventory management, production tracking, and procurement. The system supports real-time visibility into cost of production, stock levels, and receivable ageing, which is particularly important given the Company's significant inventory exposure. Regular management accounts and operational dashboards enable the senior team to monitor performance against targets on a timely basis.

HTBL’s control environment is supported by strong Group oversight, experienced management, and established financial reporting and operational procedures. As a wholly owned subsidiary of the Hi-Tech Group, key controls are centrally guided, ensuring alignment in budgeting, procurement, inventory management, and financial discipline. The presence of seasoned Group executives in senior management roles further strengthens internal oversight and ensures consistency in execution across business functions. The Company’s control framework is reinforced through structured approval hierarchies, segregation of duties, and regular reporting to the Board and Group leadership.

Pakistan's lubricants market is estimated at approximately 400,000–500,000 metric tonnes per annum (or 502 million litres by Mordor Intelligence 2025 estimates), serving automotive, industrial, agricultural, and power generation end-users. Automotive lubricants dominate demand, accounting for approximately 54.7% of volumes, with engine oils comprising the largest sub-segment at 41.7% of overall market share. Industrial lubricants — used in textiles, steel, petrochemicals, and power plants — represent the remaining demand base and are growing at a marginally faster rate than automotive grades. The market structure combines multinational operators (Shell, Chevron/Caltex, ExxonMobil/Mobil, Total-Parco), Pakistan State Oil (PSO), and local branded producers. PSO holds the largest market share at approximately 29% as of FY2025, while the broader market expanded only 3%. Nearly all Group II and Group III base oil feedstocks used by local blenders are imported, making the industry inherently exposed to exchange rate movements and freight cost volatility. Pakistan's National Tariff Policy 2025–30 maintains a differential duty structure — 11% on imported base oils versus 20% on finished lubricants — which provides a structural incentive for domestic blending over finished goods import, directly benefiting HTBL's business model post the transition to local blending. Synthetic penetration currently stands at approximately 11% of retail volumes, with meaningful room for growth as consumer awareness and vehicle sophistication increase.

HTBL occupies a strategically important position within Pakistan’s lubricant value chain as the exclusive local blending and packaging platform for ZIC-branded lubricants. The Company benefits from its association with SK Enmove, a leading global supplier of Group III/III+ base oils, providing access to advanced formulations and high-quality product standards. The shift toward local blending has further strengthened HTBL’s competitive positioning by improving cost efficiencies relative to imported finished lubricants, enabling more competitive pricing in Pakistan’s price-sensitive market while supporting supply chain localization and operational flexibility. ZIC, distributed by Hi-Tech Lubricants Limited through a nationwide network of over 20,000 retail outlets, holds an estimated mid-single-digit share of Pakistan’s lubricant market and maintains a notable presence within the premium synthetic and semi-synthetic segment. The domestic lubricant industry remains partly dependent on imported finished products as well as locally blended lubricants produced from imported base oils and additives. The polymer segment, though comparatively smaller in scale, provides meaningful operational synergies through backward integration into packaging materials for the lubricant business, while also generating additional third-party revenue streams. Through its Rigid Packaging Division, HTBL operates injection and blow moulding facilities for bottles, caps, and related plastic components, supporting supply chain reliability and reducing reliance on external vendors. Competitive intensity within the local blending market is expected to increase over the medium term following planned investments by international lubricant players, which may accelerate industry modernization and capacity expansion. In this backdrop, HTBL’s established distribution network, integrated operating model, and strategic partnership with SK Enmove are expected to remain key strengths supporting its market positioning and future growth trajectory.

For the nine months ended 31 March 2026, HTBL recorded revenue of Rs 5,837 million compared to Rs 5,470 million in the same period last year, reflecting growth of approximately 6.7% year-on-year. HTBL reported net revenue from contracts with customers of Rs 7,443 million in FY2025 (FY2024: Rs 6,456 million), representing growth of 15.3% year-on-year. The lubricant segment contributed Rs 6,975 million (94%) and the polymer segment Rs 468 million (6%). All revenue is generated domestically. The growth in lubricant revenue was driven by volume expansion rather than price increases, as the HTL distribution network continued to scale ZIC's market penetration. The polymer segment grew 1.3% from Rs 462 million, reflecting measured third-party order book expansion. The Company's revenue profile remains closely integrated with the broader Hi-Tech Group structure, with a significant portion of lubricant sales linked to HTL's distribution platform. While this reflects strong operational alignment and established market access, it also indicates reliance on the Group's continued distribution support and sales network for sustained revenue generation.

For 9M FY2026, gross profit was Rs 588 million on revenue of Rs 5,837 million, yielding a gross margin of approximately 10.1%, compared to Rs 722 million and 13.2% in the same period of FY2025; profit after tax was Rs 175 million (9M FY2025: Rs 295 million), with basic EPS of Rs 1.35 (9M FY2025: Rs 2.27), reflecting margin compression during the transition to local blending operations. Gross profit improved to Rs 1,038 million in FY2025 (FY2024: Rs 920 million), yielding a gross margin of 13.9% (FY2024: 14.2%), broadly stable despite the introduction of federal excise duty as a new cost element. The lubricant segment generated segment profit before tax of Rs 477 million, while the polymer segment reported a loss before tax of Rs 6.9 million. Operating profit rose to Rs 696 million (FY2024: Rs 644 million), with EBIT margin improving slightly to 9.3% from 9.9% in the prior year. The most notable improvement is in profit before taxation, which expanded to Rs 470 million from Rs 311 million — a 51% increase — driven primarily by a 32% decline in finance costs due to monetary policy easing. Net profit after tax was Rs 426 million (FY2024: Rs 403 million).

HTBL’s revenue sustainability is supported by the established market presence of ZIC, the extensive nationwide distribution network of Hi-Tech Lubricants Limited, and the Company’s integrated local blending and packaging operations. While current production levels remain below installed capacity, the underutilization is primarily linked to the pace of sales order growth rather than operational limitations, indicating the availability of sufficient room to accommodate future volume expansion without significant incremental capital expenditure. The commencement of local blending operations from November 2024 represents an important structural development for the sustainability of margins. The shift from imported finished lubricants toward locally blended products using imported base oils and additives is expected to improve cost efficiencies, strengthen operational value addition, and enhance supply chain flexibility. This localized operating model is anticipated to support more competitive pricing strategies in the domestic market while simultaneously improving profitability across the value chain. Going forward, gradual improvement in capacity utilization levels is expected to strengthen operational leverage, allowing fixed costs to be absorbed over a larger production base. Coupled with HTBL’s integrated packaging operations and strategic association with global lubricant supplier SK Enmove, these factors are expected to support the long-term sustainability of the Company’s revenue generation and margin profile.

As at 31 March 2026, stock-in-trade declined to Rs 1,774 million (June 2025: Rs 2,062 million), trade debts reduced to Rs 418 million (June 2025: Rs 706 million), and short-term borrowings stood at Rs 635 million (June 2025: Rs 734 million), indicating some normalization in working capital. HTBL's working capital requirements increased during FY2025 in line with higher business volumes and the transition toward local blending operations. Inventory levels built up significantly due to increased procurement of raw materials and materials in transit related to bulk imports of base oils and additives, reflecting the longer lead times and higher pipeline requirements of the new operating model compared to the earlier finished goods import structure. Trade receivables also increased, driven by higher sales volumes and intra-group transactions within the broader Hi-Tech Group, reflecting the integrated nature of operations. As a result, operating cash flow moderated during FY2025; however, the movement largely reflects timing-related working capital absorption rather than any deterioration in underlying operational performance. The Company continues to maintain adequate short-term liquidity and has sufficient working capital lines available to meet its operational funding requirements.

For 9M FY2026, profit from operations of Rs 359 million against finance cost of Rs 154 million yields an interest coverage ratio of approximately 2.33x, moderating from the FY2025 full-year ratio of 3.09x primarily due to margin compression during the blending transition. Coverage metrics indicate an improvement in HTBL's debt servicing capacity during FY2025, supported by a reduction in finance costs and improved operating performance. Finance cost declined significantly year-on-year, resulting in a stronger interest coverage ratio of 3.09x compared to 1.94x in the previous year.

As at 31 March 2026, total equity strengthened to Rs 3,913 million (June 2025: Rs 3,738 million) on retained profit of Rs 175 million, while total borrowings — comprising long-term financing of Rs 693 million, short-term borrowings of Rs 635 million, and lease liabilities of Rs 1.8 million — aggregated approximately Rs 1,330 million, with gearing broadly stable at approximately 25.4%. HTBL's capital structure remains moderate and continues to show gradual improvement, supported by a strengthening equity base and a manageable leverage profile. Total equity as at 30 June 2025 stood at Rs 3,738 million, with revenue reserves of Rs 1,332 million. Total borrowings, including long-term financing, lease liabilities, and short-term borrowings, aggregated Rs 1,243 million, translating into a gearing ratio of 26.0%. The increase from 22.98% in FY2024 is primarily attributable to higher short-term borrowings; however, overall leverage remains at a manageable level. Long-term debt mainly comprises TERF I and TERF II facilities under the SBP TERF scheme, along with a solar term finance facility, all of which remain fully utilized at concessionary rates.