Karachi: VIS Credit Rating Company Limited has maintained its entity ratings for Ittehad Chemicals Limited (ICL) at ‘A-/A2’, while revising the outlook from Stable to Positive. The updated ratings reflect the company’s robust credit quality and sound short-term liquidity, despite economic uncertainties.
Established in 1991, Ittehad Chemicals Limited is a key player in Pakistan’s chemical manufacturing industry, originating from the merger of Ittehad Chemicals and Ittehad Pesticides. The company, operating primarily from Kala Shah Kaku with its head office in Lahore, is known for producing caustic soda, liquid chlorine, and other chemicals, primarily catering to the domestic market with limited exports to the GCC region. Ittehad’s business operations are further supported by its subsidiaries, including ICL Power (Pvt.) Ltd and Ittehad Salt Processing (Pvt.) Ltd.
The maintained ratings consider the medium business risk profile of Pakistan’s chemical sector, characterized by high entry barriers and moderate demand cyclicality. Energy cost volatility and reliance on imported raw materials are noted risk factors, while product and client diversification provide stability.
The improved outlook reflects ICL’s stable financial risk profile amid challenging economic conditions, as well as ongoing projects aimed at enhancing revenue and operational efficiency. Despite facing elevated input costs and currency depreciation, ICL has demonstrated signs of recovery in profitability, aided by energy efficiency initiatives and pricing adjustments.
The company’s financial health is further bolstered by a decline in interest rates and improved capital structure due to retained earnings. Liquidity remains adequate, supported by stable current and coverage ratios. Future profitability is expected to benefit from new projects like the biomass power initiative and caustic soda flaker unit, which aim to enhance cost efficiency and expand revenue streams.
VIS’s future reviews will focus on ICL’s ability to sustain its financial risk profile and realize gains from its ongoing projects.