Nimir Industrial Chemicals Limited (hereafter 'NICL' or 'the Company') is a public limited company incorporated in Pakistan under the Companies Ordinance, 1984, and subsequently governed by the Companies Act, 2017. The Company was originally incorporated on February 6, 1994, under the name Ravi Alkalis Limited. Its name was subsequently changed to Nimir Industrial Chemicals Limited in March 1998, following a change in controlling ownership. The registered office and principal place of business are located in Lahore, Punjab, Pakistan, while the Company's primary manufacturing operations are carried out through a single integrated facility situated on Faisalabad Road, approximately 14.8 kilometres from Sheikhupura in Punjab. The Company forms part of the broader Nimir Group of Companies, a conglomerate with interests across specialty chemicals, resins, chemcoats, and energy services. Within the group structure, NICL functions as the flagship operating entity and the primary revenue and earnings generator. The group's other constituent entities are Nimir Resins Limited (PSX-listed), Nimir Chemcoats (Private) Limited, and Nimir Energy Limited, the last of which was recently acquired from Sunsation Energy (Private) Limited.

The origins of the Nimir enterprise trace to 1964, when alkyd resin manufacturing was first established under the founding management. The formal incorporation of the current legal entity occurred in February 1994 under the name Ravi Alkalis Limited, initially structured as a private limited company with the primary purpose of manufacturing chlor-alkali products for industrial consumption. In 1994, the Nimir Group acquired the entity and changed its legal form to a public limited company, and the Company was admitted to listing on the Pakistan Stock Exchange in 1996, providing it access to public equity capital and imposing the disclosure and governance obligations of a listed entity. The first significant external ownership transition took place in 1998, when a Saudi-based investor group assumed majority control and the entity was rebranded as Nimir Industrial Chemicals Limited. This period saw early strategic efforts to diversify the product base beyond chlor-alkali into oleo-chemicals, a transition that proved foundational to the Company’s future growth, with oleo-chemicals introduced at commercial scale in 2000. In 2004, the Saudi owners divested their controlling interest to Knightsbridge, an American group, which brought with it exposure to international chemical manufacturing practices and distribution capabilities, and soap noodle production commenced in 2007. The most transformative ownership event in the Company’s history occurred on June 28, 2011, when five senior members of the management team executed a management buyout from Knightsbridge and acquired majority shareholding of the Company. This consortium initially held their combined stake through Nimir Resources (Private) Limited, the holding vehicle established for the MBO transaction, and subsequently dissolved the holding vehicle structure to hold their respective stakes directly as individuals. This transition aligned ownership and management interests in an unusually direct manner, converting the entity from a foreign-controlled subsidiary into a domestically owned and managed enterprise. The management buyout was financed through a combination of the management team’s personal resources and debt. Since the 2011 buyout, the Company’s growth trajectory has been distinctly organic and internally funded, underpinned by progressive product diversification and capacity expansion through retained earnings and incremental borrowing. Key milestones in the post-buyout era include international-scale soap finishing operations in 2014, aerosol product manufacturing in 2020, and the commissioning of a chlorinated paraffin wax facility in 2022. In July 2024, the Company acquired the Procter and Gamble Pakistan manufacturing facility located in Hub, Balochistan, adding third-party manufacturing capacity for soap finishing and oleo-chemicals while reinforcing NICL’s footprint in the southern region of Pakistan. The controlling group remained intact for over fourteen years following the buyout. However, on October 30, 2026, the majority shareholders entered into a Share Purchase Agreement with Cherat Cement Company Limited for the sale of a 51.00% controlling stake at PKR 340 per share (~PKR 19.2bln). As per media reports, the total transaction size, including shares to be acquired through the mandatory public offer, is ~PKR 24bln. The transaction is subject to the fulfilment of conditions precedent and receipt of regulatory approvals, upon which Cherat Cement will become the holding company of NICL.

NICL operates across six principal business segments from a single integrated manufacturing facility on Faisalabad Road, Sheikhupura. The plant has an installed annual production capacity of ~140,000 metric tons for oleochemical products and ~158,400 metric tons for chlor-alkali products, making NICL one of the largest dedicated specialty chemical manufacturers in Pakistan by installed capacity. The recently acquired Hub, Balochistan facility supplements this base specifically for soap finishing and oleochemical operations serving the Company's multinational fast-moving consumer goods clients in the southern market. The six core segments comprise oleo-chemicals, chlor-alkali products, third-party manufacturing services (3PM), optical brightening agents and textile chemicals, pulp and paper chemicals, and construction chemicals. Additionally, the Company has extended its scope into renewable energy solutions, offering solar energy services including financing, operations and maintenance, project consultancy, and turnkey engineering, procurement, and construction for solar installations, as well as electric vehicle battery services. The oleo-chemical segment, historically the largest contributor to revenues, produces soap noodles, stearic acids, glycerin, hydrogenated oils, and distilled fatty acids, primarily consumed by the soap, personal care, and food industries. The chlor-alkali segment manufactures caustic soda, liquid chlorine, sodium hypochlorite, hydrochloric acid, and chlorinated paraffin wax. The textile chemicals segment provides chemical solutions for sizing, pre-treatment, dyeing, printing, and finishing, addressing the Company's dominant end market in Pakistan's textile industry. The 3PM segment provides toll manufacturing of toilet soap bars, aerosols including body sprays, air fresheners, insecticides, shaving foam, and liquid formulations such as shampoos, hand wash, lotions, and sanitizers, as well as home care products including fabric bleach and liquid detergents. This segment was significantly strengthened by the P&G facility acquisition in 2024, and NICL holds the distinction of being the toll manufacturer for Safeguard soap in Pakistan. In the most recently reviewed period, oleochemical sales volumes grew by 10%, while chlor-alkali volumes experienced a contraction of approximately 26%, reflecting divergent demand trends between essential industrial chemicals (more stable) and the more discretionary non-essential segments.Geographically, the Company derives the overwhelming majority of its revenue from domestic sales within Pakistan, with export revenues contributing ~6.2% of gross sales for FY26, amounting to ~PKR 3,496mln against local sales of ~PKR 53,111mln. Export markets include the Middle East, Central Asia, South Asia, and East Africa. NICL's supply chain is anchored on imported raw materials principally vegetable oils and palm oil derivatives for the oleo-chemical segment, and basic industrial chemicals for chlor-alkali and textile chemical operations. The customer base spans domestic soap manufacturers, textile mills, pharmaceutical companies, multinational consumer goods companies, and the construction sector.

Effective control over NICL currently resides with Mr. Zafar Mahmood, who has served as Chief Executive Officer since August 2007 and was one of the five principal architects of the 2011 management buyout. Prior to the transaction, Mr. Mahmood directly held ~19.67% of the outstanding ordinary shares and remains the principal strategic decision-maker of the Company. The five-member MBO consortium, having previously held their aggregate stake through Nimir Resources (Private) Limited as a holding vehicle, subsequently dissolved this structure, and each individual sponsor now holds their stake directly on the share register of NICL. Directors, the CEO, and their spouses and minor children collectively hold ~38.51% of total issued shares. The other principal sponsors include Mr. Khalid Qazi (~11.51%), Mr. Muhammad Yahya Khan (~11.89%), Mr. Imran Afzal (~9.71%), Mr. Umar Iqbal (~6.68%), and Mr. Aamir Jamil (~5.31%), while the general public accounts for ~58.39% of total shares outstanding.

The ownership of the Company is now in transition. On September 10, 2026, Cherat Cement Company Limited (PSX: CHCC) made a public announcement of its intention to acquire at least 30% of NICL. Subsequently, on October 30, 2026, the majority shareholders of NICL entered into a Share Purchase Agreement (SPA) with Cherat Cement for the sale of 56,401,178 ordinary shares, representing 51.00% of the Company’s issued and paid-up capital, at PKR 340 per share. The consideration for this 51.00% stake amounts to ~PKR 19.2bln. Completion of the transaction is subject to the fulfilment of conditions precedent under the SPA and the receipt of all regulatory approvals.

In addition, under the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017, Cherat Cement is required to make a public offer to the remaining shareholders of NICL, who may choose whether or not to tender their shares. As per media reports, the total transaction size, including the shares expected to be acquired through the public offer, is ~PKR 24bln. At the SPA price of PKR 340 per share, this corresponds to a shareholding of ~64% in NICL. Media reports further indicate that Cherat Cement’s stake may increase to ~70–75% depending on the response to the public offer, while the existing management is expected to retain ~15%. Upon completion, Cherat Cement will become the majority shareholder and holding company of NICL.

The ownership structure of NICL demonstrated exceptional stability following the completion of the management buyout in June 2011. In contrast to the preceding period of two external ownership transitions within seventeen years, the management-owner group maintained undisputed control for more than fourteen years, establishing a track record of consistent strategic direction and operational commitment. However, the ownership is now in transition following the signing of the SPA for the sale of a 51.00% controlling stake to Cherat Cement Company Limited. Upon completion, control will pass from the founding management-owner group to a corporate sponsor, while the existing management is expected to retain a minority stake. The continuity of the existing management team, the strategic direction under the new sponsor, and the level of support available from Cherat Cement will be key considerations once the transaction concludes. As the rating implications of the change in ownership cannot be fully assessed until the transaction is completed, the ratings have been placed on Rating Watch.

The sponsors and controlling management team have demonstrated strong industry acumen over their tenure. Most of the sponsors are pioneers of the Nimir Group and have been associated with it since its inception in 1994, giving them a combined industry experience of over three decades. Mr. Zafar Mahmood's leadership spans multiple severe economic cycles in Pakistan, including the rupee depreciation and high inflation environment of 2022 to 2024. Under his direction, the Company successfully diversified from a narrowly focused chlor-alkali manufacturer into a diversified specialty chemicals and third-party manufacturing platform, pioneering several product categories in Pakistan including oleo-chemicals (2000), soap noodles (2007), international-scale soap finishing (2014), aerosols (2020), and chlorinated paraffin wax (2022). The decision to pursue the Procter and Gamble manufacturing facility acquisition in 2024 is indicative of strategic opportunism in a challenging macroeconomic environment, demonstrating both the confidence of the sponsors and their ability to execute non-organic growth initiatives.

The financial strength of the current sponsors is anchored primarily in their equity holdings within NICL, supplemented by their stakes in Nimir Resins Limited and the other group entities, Nimir Chemcoats (Private) Limited and Nimir Energy Limited. Upon completion of the transaction, the financial strength of the sponsor will be assessed with reference to Cherat Cement Company Limited, a listed cement manufacturer. As per media reports, Cherat Cement intends to fund the acquisition through ~PKR 16bln of its own cash and short-term investments, with the remaining consideration financed through a seven-year syndicated loan from local banks. The impact of this acquisition-related borrowing on Cherat Cement’s own financial profile, and consequently its capacity to support NICL, will be evaluated once the transaction concludes.

The Board of Directors of NICL comprises nine members, structured to ensure compliance with the Listed Companies (Code of Corporate Governance). The board composition includes three Executive Directors, two Non Executive Directors, three Independent Directors, and one Nominee Director representing an institutional lender creditor (PBICL). The Chairman and CEO roles are formally separated, with the Chairman serving in a Non Executive capacity, a fundamental governance requirement that is confirmed to be in place.

The Board of Directors benefits from a diverse mix of professional qualifications and sector experience. Mr. Muhammad Saeed-uz-Zaman, the Non-Executive Chairman, holds an Electrical Engineering degree and has extensive senior management experience in both the public and private sectors of Pakistan. Mr. Zafar Mahmood, the CEO and Executive Director, is a Fellow of the Institute of Cost and Management Accountants of Pakistan (FCMA) since 1991, with over thirty-three years of experience in multinational companies and has been associated with the Nimir Group for approximately thirty years a combination of professional qualification and institutional longevity that is uncommon among listed company CEOs in Pakistan. Mr. Aamir Jamil, Executive Director, is a Certified Management Accountant holding an MBA and brings over twenty-nine years of diversified experience in financial planning, accounting, and corporate affairs. Mr. Imran Afzal brings commercial and sales expertise. The independent directors Javed Saleem Arif, Parveen Akhtar Malik, and Humaira Shazia collectively contribute external perspectives and oversight capacity that are essential for the audit and remuneration committee functions. The presence of a nominee director from PBICL provides an institutional lender's perspective in board deliberations, which is relevant given NICL's significant bank borrowing profile. The average board tenure of ~5.7 years reflects a mix of long-serving members with institutional knowledge and relatively recent appointees. The overall skill composition spanning finance, engineering, commercial operations, and independent oversight is assessed as appropriate and diverse for an entity of NICL's operational complexity.

The board has demonstrated effectiveness in establishing the strategic direction of the Company and maintaining alignment between shareholder and management objectives which is particularly notable given the near-complete overlap between these two constituencies. The sustained improvement in operating performance, the execution of the Procter and Gamble facility acquisition, and the Company's progressive debt reduction trajectory over the analytical period collectively reflect a board that is strategically engaged rather than merely ceremonially constituted. The formal separation of Chairman and CEO roles provides a structural check on executive authority. The Audit Committee's oversight of related-party transactions is relevant given the existence of transactions with related entities in the Nimir Group, as evidenced by the small but recurring balances of amounts due from related parties. Board and committee meeting attendance has been recorded as satisfactory.  The board has constituted the two requisite sub-committees mandated under applicable governance regulations: the Audit Committee and the Human Resource and Remuneration Committee. During the period under review, several meetings of the full board, the Audit Committee, and the HR and Remuneration Committee were held, with satisfactory attendance recorded across all meetings. The Audit Committee is chaired by an independent non-executive director and provides oversight of financial reporting, internal controls, the external audit engagement, and related-party transactions.

NICL's financial statements are audited by EY Ford Rhodes Chartered Accountants, a member firm of Ernst and Young International and one of the Big Four global audit firms operating in Pakistan. The engagement of a Big Four auditor is an important indicator of audit quality, regulatory standing, and the credibility of the Company's financial reporting, and is viewed positively in the assessment of financial transparency.  The audit opinion for the year end June 2026, have been unqualified, with no emphasis-of-matter paragraphs, qualifications, or going concern modifications identified in the publicly available disclosures reviewed for this assessment

The Company operates through nine functional departments, each headed by an experienced manager with a direct or near-direct reporting line to the CEO. The nine departments are: Production, Marketing and Sales, Accounts and Finance, Human Resource and Administration, Supply Chain, Information Technology, Research and Development, Quality Control, and Quality Assurance. This functional architecture reflects the full spectrum of capabilities expected of an integrated specialty chemical manufacturer and toll manufacturing operator. The decision-making model is assessed as largely centralized, consistent with a management-owned entity where the CEO exercises significant personal authority over strategic and operational matters. However, the clear functional separation across nine departments with experienced heads in each domain provides adequate delegation of day to-day operational authority. Senior management meetings are conducted regularly for strategic discussion and decision-making, supplemented by weekly management meetings in which performance and targets across all departments are reviewed in detail.

Mr. Zafar Mahmood has led NICL as CEO since August 2007, an uninterrupted tenure of eighteen and a half years that makes him one of the longest-serving CEOs among listed industrial companies on the PSX. He is a Fellow of the Institute of Cost and Management Accountants of Pakistan (FCMA) since 1991, bringing over thirty-three years of experience in multinational companies, with approximately thirty years of direct association with the Nimir Group. His direct ownership stake of~19.67% ensures an exceptionally strong alignment of personal financial interest with corporate outcomes. Mr. Khalid Qazi, serving as Director Finance and Head of Treasury and Administration, holds an MBA qualification and has been associated with the Nimir Group for approximately twenty-nine years a tenure that predates even the management buyout and reflects extraordinary institutional continuity in the finance function. His direct shareholding of ~11.51% reinforces management-owner alignment at the treasury and financial oversight level. Mr. Aamir Jamil, Executive Director and Head of Accounts, is a Certified Management Accountant with an MBA and over twenty-nine years of diversified financial experience, also holding a direct stake of ~5.31%. The CFO function oversight is provided by Syed Nasim (approximately seven years' tenure). Other senior functional leads Umar Iqbal (technical), Imran Afzal (sales and marketing), and Muhammad Khan (commercial) each carry both functional expertise and direct financial stakes in the Company. Key-person risk is concentrated in Mr. Zafar Mahmood, whose strategic vision and relationship capital are deeply embedded in the Company's identity.

Management has demonstrated a consistent track record of executing on strategic objectives, most visibly through the successful progressive diversification of the product portfolio over the past decade and a half. The introduction of aerosols in 2020 and chlorinated paraffin wax in 2022 under difficult macroeconomic conditions reflects operational competence and strategic resolve. The acquisition and integration of the Procter and Gamble facility in 2024, which strengthened the 3PM segment, is the most recent demonstration of management's ability to execute non-organic strategic initiatives under a challenging funding environment. Operationally, management has been effective in navigating Pakistan's severe macroeconomic stress of the 2022 to 2024 period. The stability of gross and operating margins throughout this period, gross margin remaining in the ~14.6% to ~14.8% band during FY23 to FY25 before improving to ~15.7% in FY26, despite significant input cost and exchange rate volatility, speaks to disciplined cost management and effective pricing strategy, the latter being indexed to dollar rates, which provided an important protective mechanism during periods of rupee volatility.

NICL operates SAP Business One as its core enterprise resource planning and management information system. The platform was implemented in July 2012 by Abacus Consulting, a leading Pakistani technology services provider, and is maintained under an Annual Maintenance Contract with the same vendor, ensuring ongoing technical support and periodic updates. SAP Business One is a widely deployed ERP solution in Pakistan's mid sized manufacturing sector, providing integrated modules for financial accounting, inventory management, procurement, production planning, and sales and distribution. The implementation of SAP Business One has enabled highly automated manufacturing and operational procedures that translate directly into operational efficiencies and reliable financial reporting. Management utilizes the system for real-time inventory tracking, receivable and payable management, cost accounting, and generation of management reports used in the weekly and senior management review meetings. The presence of a dedicated Information Technology department among the Company's nine functional units indicates that IT governance and system maintenance are treated as formal operational responsibilities. Business continuity and disaster recovery arrangements are expected to be addressed within the annual maintenance framework with Abacus Consulting, though the specific details of disaster recovery testing frequency and recovery time objectives are not publicly disclosed.

NICL's control environment is anchored by an Internal Audit department that reports directly to the Board Audit Committee, providing the necessary independence from executive management. The Internal Audit function provides periodic detailed reports to the Audit Committee for review, assessment, and identification of remedial actions where required. Notably, separate internal audit reports are prepared for each discrete financial process including inventory management, payroll, procurement, accounts receivable, and accounts payable with a risk rating matrix prepared and shared with the Audit Committee for each process. This process-specific reporting structure with embedded risk rating matrices represents a more rigorous control framework than a generic or consolidated internal audit approach and is assessed positively. Umair Tahir serves as Head of Internal Audit with ~two and a half years in the role.

Pakistan’s industrial chemicals sector occupies a structurally important position in the national economy, serving as a critical input supplier to the country’s largest industries including textiles and apparel, pharmaceuticals, agriculture, construction, food processing, and consumer goods. Chemicals carry a weight of ~2.6% in the LSM index. Sector production declined to ~3.4mln MT in FY26 (annualised from 11MFY26), a contraction of ~9.6% YoY from ~3.8mln MT in FY25, which itself had declined by ~7.5% from ~4.1mln MT in FY24. This reflects continued demand compression across key downstream industries, even as overall LSM grew by ~6.5% in FY26. Chemical imports rose to ~USD 8.2bln in FY26 (FY25: ~USD 7.6bln), while exports declined to ~USD 1.0bln (FY25: ~USD 1.2bln), underscoring the sector’s structural dependence on imported raw materials and intermediates. Demand conditions across core chemical segments remained uneven. Within the chlor-alkali category, caustic soda production declined by ~10.4% YoY to ~318,000 MT in 9MFY26, following a ~9.1% decline to ~452,000 MT in FY25, reflecting weak downstream offtake from the soaps and detergents industry. Despite lower volumes, segment sales grew by ~8.7% YoY to ~PKR 48,449mln in 9MFY26 on the back of input cost pass-through, with gross margin stable at ~17.2%. Energy remains the key cost driver, accounting for ~43.2% of caustic soda’s cost of sales in 9MFY26 (9MFY25: ~44.8%), while the share of raw materials rose to ~47.4% (9MFY25: ~40.3%). Tariff protection is set to moderate, as customs duty on caustic soda has been reduced to 15% for FY27 from 20% and additional customs duty of 2% has been withdrawn, which may intensify import competition. The oleochemicals segment, in which NICL holds the dominant position as the largest domestic producer with an installed annual capacity of ~140,000 MT, is characterised by high working capital intensity and a concentrated competitive structure. Segment revenue grew by ~6.0% YoY to ~PKR 44,332mln in 9MFY26, while gross margin eased to ~13.9% from ~14.8% in 9MFY25. The primary demand driver for oleochemicals, soaps and detergents production, remained under pressure, declining by ~11.0% YoY to ~235,000 MT in 9MFY26 after a ~36.0% contraction in FY25. The segment’s financial profile nonetheless improved, with leverage declining to ~58% in 9MFY26 (FY25: ~64%) and interest coverage strengthening to ~2.6x (FY25: ~2.0x). At the sector level, total borrowings increased by ~30.7% to ~PKR 867.4bln at end-June 2026, reflecting working-capital-led funding requirements. The monetary easing cycle reversed in April 2026, when the policy rate was raised to 11.5% from 10.5%, while headline inflation stood at ~11.1% in June 2026, which may raise financing costs for working-capital-intensive segments. The top credit risk factors endemic to the sector include raw material import cost inflation driven by exchange rate depreciation, demand cyclicality linked to the textile and consumer goods sectors, working capital intensity requiring significant short-term borrowing, competitive pressure from Chinese and Middle Eastern chemical producers amid global overcapacity, elevated energy costs including higher gas levies and RLNG prices, freight and supply disruptions linked to the Middle East, and rising environmental regulatory compliance costs. Barriers to entry are moderate for commodity chemical segments such as caustic soda and significantly higher for specialty and value-added segments requiring technical certification, application expertise, and established customer relationships, a distinction relevant to NICL’s positioning in oleochemicals and third-party manufacturing.

NICL occupies the position of a leading diversified specialty chemical manufacturer in Pakistan, with a distinctive competitive advantage rooted in its product diversification, its pioneering role in establishing oleo-chemical and soap noodle manufacturing domestically, and its third-party manufacturing capabilities for multinational fast moving consumer goods companies. The Company self-describes as the pioneer of oleo-chemicals in Pakistan, having introduced the category in 2000, and its sustained market presence over more than two decades in this segment has translated into established customer relationships, application expertise, and supply chain capabilities that would be difficult for a new entrant to replicate rapidly. Within the PSX-listed chemical sector, NICL holds a differentiated position by virtue of its oleo-chemical platform and 3PM capabilities. ICI Pakistan Limited (PSX: ICI), with its significantly larger balance sheet and diversified product portfolio, including polyester, soda ash, and life sciences, represents the scale benchmark for the sector. Engro Polymer and Chemicals Limited (PSX: EPCL), focused on PVC and chlor-vinyl products, occupies a distinct segment but shares the import dependent raw material model. Sitara Chemical Industries Limited (PSX: SITC), with its chlor-alkali and textile chemical focus, is the most directly comparable peer in certain product segments. Nimir Resins Limited (PSX: NRSL), as a related group entity, provides an additional point of comparison in specialty chemicals. The acquisition of the Procter and Gamble manufacturing facility in July 2024 has materially enhanced NICL’s competitive position in the 3PM segment. The facility adds certified manufacturing infrastructure for a globally demanding client whose quality and regulatory requirements serve as an effective barrier to entry for less capable manufacturers, and simultaneously establishes NICL’s manufacturing presence in Balochistan, expanding its geographic footprint beyond Punjab. This development represents a structural improvement in competitive positioning relative to the previous review cycle and is expected to generate incremental revenue and capacity utilisation benefits as integration is fully completed. In FY26, NICL reported net sales of ~PKR 48,291mln with a gross margin of ~15.7%, above the ~13.9% gross margin of the oleochemicals segment for 9MFY26, reflecting the benefit of its diversified mix across oleochemicals, chlor-alkali, and 3PM operations. Going forward, the reduction in customs duty on caustic soda from FY27 may intensify import competition in the chlor-alkali segment, where NICL’s volumes have already been under pressure.

Net revenue for FY26 amounted to ~PKR 48,291mln, against ~PKR 45,255mln in FY25, reflecting growth of ~6.7%. This follows ~7.9% growth in FY25, which reversed the ~4.3% revenue decline recorded in FY24 amid Pakistan’s macroeconomic stress period; the three-year average sales growth stands at ~3.4%. The growth has been driven by a combination of volume recovery in oleochemicals and a degree of price-driven revenue contribution as the Company’s dollar-indexed pricing strategy provided pass-through against import cost movements. In terms of segment volume dynamics, oleochemical sales volumes grew by ~10% in the most recently reviewed period relative to the prior year, reflecting recovering consumer demand and the additional capacity from the P&G facility acquisition. In contrast, chlor-alkali volumes declined by ~26% in the same period, reflecting weaker industrial demand in certain end markets, including the textile sector’s own production cycle, and potential import competition effects. This divergence underscores the strategic importance of NICL’s product diversification, the strength in oleo-chemicals partially offsetting the weakness in chlor-alkali, moderating the overall revenue impact. The revenue mix reflects local market dominance. Local sales of ~PKR 53,111mln represent ~93.8% of gross sales for FY26, with export sales at ~6.2% or ~PKR 3,496mln. Customer concentration risk is mitigated by the breadth of end-market exposure, and Procter and Gamble Pakistan, as the most prominent individual customer represents strategic rather than financial concentration risk.

Gross margin for FY26 improved to ~15.7% from ~14.8% in FY25, the highest level over the four-year analytical period. This improvement in conversion margin, despite swings in raw material input costs and exchange rates, reflects the Company’s disciplined cost pass-through mechanisms, effective dollar-indexed pricing strategy, and the value-added nature of its product portfolio. Operating profit margin improved to ~13.0% in FY26 from ~11.9% in FY25, as operating expenses remained broadly flat at ~PKR 1,315mln (FY25: ~PKR 1,291mln) against higher sales. EBITDA for FY26 reached ~PKR 7,108mln (FY25: ~PKR 6,212mln), implying an EBITDA margin of ~14.7% on net sales. Total finance cost declined to ~PKR 1,804mln from ~PKR 2,527mln in FY25 on the back of monetary easing, lowering finance cost to sales to ~3.5% (FY25: ~5.4%) and lifting profit before tax by ~63.7% to ~PKR 4,488mln. However, the effective tax rate rose sharply to ~46.7% in FY26 from ~26.2% in FY25. A significant portion of the ~PKR 2,095mln tax charge is deferred in nature, with the deferred tax liability increasing by ~PKR 954mln to ~PKR 1,788mln, while taxes paid during the year amounted to ~PKR 486mln. Consequently, net profit grew by ~18.3% to ~PKR 2,393mln, with the net margin improving only modestly to ~5.0% (FY25: ~4.5%). The elevated tax burden warrants monitoring in subsequent periods.

The long-term viability of NICL's competitive positioning rests on three pillars: continued growth and deepening of its 3PM business through multinational client relationships, sustained leadership in oleo-chemicals through manufacturing quality and application expertise, and the progressive reduction of leverage as cash flows improve in a declining interest rate environment. All major capital projects, including the Liquid Chlorine and Chlorinated Paraffin Wax plants, have transitioned to full commercial operations, removing implementation risk and contributing to revenue stability and margin enhancement. The P&G facility acquisition in Hub, Balochistan, is expected to augment production capabilities in soap finishing and oleo-chemicals while opening new export opportunities in the southern corridor. The Company's entry into the renewable energy segment positions NICL to participate in Pakistan's growing solar market and potentially reduce its own energy costs through self-generation, which would be a meaningful margin benefit over the medium term. From an ESG perspective, compliance with Pakistan's environmental protection requirements for chemical manufacturers is an ongoing operational obligation, and the increasing sustainability requirements of multinational FMCG clients particularly relevant, given the P&G relationship, which could create incremental compliance costs but also reinforce NICL's competitive positioning as a certified, standards-compliant manufacturer

The working capital cycle of NICL lengthened during FY26. The gross working capital cycle extended to ~136 average days, compared to ~122 days in FY25, driven primarily by an increase in trade receivable collection days from ~52 days in FY25 to ~63 days in FY26, with trade receivables rising to ~PKR 8,910mln (FY25: ~PKR 7,810mln). This receivables extension warrants monitoring and may reflect a change in credit terms extended to customers, increased payment delays from industrial buyers, or a shift in customer mix toward entities with structurally longer payment cycles, such as export customers or large multinational counterparties. Inventory days averaged ~72 days in FY26, compared to ~70 days in FY25. Raw material inventory of ~PKR 8,324mln (FY25: ~PKR 6,187mln) represents the dominant inventory component at an average of ~55 days, consistent with the need to maintain buffer stocks for imported inputs that are subject to supply chain disruption and foreign exchange rate risk. Trade payable days of ~15 days (FY25: ~13 days) remain low, indicating that the Company does not benefit from significant supplier credit extension and relies predominantly on its banking facilities to bridge the working capital gap. The net working capital cycle of ~121 average days against ~109 days in FY25 reflects a deterioration that translated directly into higher short-term borrowings, which increased by ~PKR 1,267mln to ~PKR 14,412mln at end-June 2026.

The coverage profile of NICL improved materially in FY26, driven by the combination of stronger free cash flow from operations and significantly reduced finance costs as the monetary easing cycle took hold. Free cash flow from operations for FY26 amounted to ~PKR 6,345mln, up ~16.3% from ~PKR 5,456mln in FY25. The FCFO to finance cost ratio improved to ~3.7x from ~2.2x in FY25, while the EBITDA to finance cost ratio improved to ~4.2x from ~2.5x. Debt payback, measured as total borrowings plus excess short-term borrowings divided by FCFO net of finance costs, improved to ~0.9x from ~1.8x in FY25. The FCFO to finance cost plus CMLTB plus excess short-term borrowings ratio of ~2.2x, against ~1.3x in FY25, reinforces the assessment that debt servicing capacity is robust.

Total borrowings stood at ~PKR 18,469mln at end-June 2026, broadly stable against ~PKR 18,658mln at June 30, 2025 (~1.0% reduction). The composition shifted toward short-term funding: long-term borrowings, including the current maturity, were reduced by ~PKR 1,457mln to ~PKR 4,056mln, while short-term borrowings increased by ~PKR 1,267mln to fund the higher working capital requirement. The total debt to total capitalisation ratio declined to ~61.6% at June 2026 from ~65.5% at June 2025, a deleveraging driven mainly by growth in the equity base through retained earnings rather than net debt reduction. The debt structure is heavily weighted toward short-term obligations, with short-term borrowings constituting ~78.0% of total borrowings (~84.3% including the current maturity of long-term debt) at June 2026. Short-term borrowing limits of ~PKR 18,636mln were ~77.3% utilized, leaving unutilized headroom of ~PKR 4,224mln. Equity quality is strong, with shareholders’ equity of ~PKR 11,534mln as of June 2026 (FY25: ~PKR 9,820mln). The equity base is entirely composed of paid-up capital and retained earnings with no revaluation surplus or capital reserves, a high-quality equity constitution reflective of genuine accumulated earnings. Financial flexibility is assessed as adequate and improving.