PACRA Maintains Entity Ratings of Premier Industrial Chemical MFG. Co. (Pvt.) Limited | Rating Watch

Premier Industrial Chemical MFG. Co. (Pvt.) Limited ("the Company") maintains an established position in Pakistan's ethanol industry, underpinned by its sizeable production capacity and diversified operations across ethanol, dairy and juice segments. Pakistan's sugar sector witnessed a notable improvement in cane availability during FY25-26, with sugarcane production increasing to 89.4 million MT from 84.2 million MT in FY24-25. The improved cane availability is expected to support better molasses availability for the ethanol industry going forward. Despite improved molasses availability during the current season, the Company's operational performance remained subdued during CY25, primarily as management's strategic focus shifted towards development and commissioning of its new corn-based ethanol facility. The transition was undertaken to reduce the Company's reliance on molasses as the primary feedstock and establish a more stable and sustainable production base. Accordingly, ethanol production declined to 25,416 MT in CY25 from 69,324 MT in CY24, resulting in capacity utilization of ~20.5% compared to ~55.9% previously. The temporary decline in ethanol operations also altered the revenue mix, with the ethanol segment contributing ~65% of total revenue in CY25 compared to ~83% in CY24, while dairy & juice contribution increased to ~35% from ~17%. Notably, the Company has achieved a key strategic milestone with the Commercial Operation Date (COD) of its new corn-based ethanol facility in August 2026, following successful completion of trial operations in July 2026. The facility is intended to provide a stable, alternative feedstock and reduce the Company's reliance on molasses, thereby enabling more consistent utilization of the existing 124,000 MT ethanol capacity. The project extends annual operations from ~6 to ~11 months, driving higher utilization, continuity, and revenue throughout the period. The Company's financial profile, however, witnessed material dilution during CY25, primarily on account of subdued ethanol production arising from constraints in molasses availability and pricing volatility. Revenue declined by 57.5% to PKR 7.1bln (CY24: PKR 16.7bln), as ethanol production fell to 25,416 MT (CY24: 69,324 MT), translating into capacity utilization of ~20.5% (CY24: ~55.9%). Profitability remained under pressure, with gross margin declining to 7.8% (CY24: 9.5%); the Company posted an operating loss of PKR 260mln and a net loss of PKR 1.2bln (CY24: net loss of PKR 471mln). The financial risk profile also weakened, with total borrowings rising to PKR 11.8bln (CY24: PKR 5.4bln), taking leverage to ~51% (CY24: ~36%). The working capital cycle elongated materially, with net working capital days increasing to 120 days (CY24: 35 days), while coverage metrics remained weak. Given the significant mismatch between the Company's current assets and current liabilities, liquidity remains a key area of consideration, rating watch has assigned.
The ratings remain supported by the Company’s established presence in the ethanol export segment, experienced management, diversified business operations and strong sponsor financial strength. However, the Company’s financial profile remains under pressure, with sustained improvement in profitability and cash flow generation, efficient working capital management, prudent leverage and strengthening of the governance framework remaining important rating considerations.

About the Entity
Premier Industrial Chemical Manufacturing Co. (Private) Limited (‘the Company’) was incorporated in Jun-03 as a private limited company. The Company is primarily engaged in the manufacturing and sale of industrial grade ethanol, dairy products and juices. The Company has total annual ethanol production capacity of 124,000 MT. The Company is completely owned by the sponsoring family, with the majority shareholding held by Mr. Muhammad Saeed, Mr. Shahid Saeed and Mr. Tahir Saeed. Mr. Muhammad Saeed serves as Chief Executive Officer and Chairman of the Board and has been associated with the Company since inception. The Company’s dairy and juices segment is headed by Director Mr. Shahid Saeed.