Chemical Industry of Pakistan

ITTEHAD CHEMICALS LTD

Registered Office / Head Office: 39-Empress Road, Lahore Pakistan.

Tel: +92 42 36306586 - 88
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Final Project Report

Submitted by:
➢ Rimsha Kanwal 578-FMS/BSAF/F20
➢ Aymen Summiya 594-FMS/BSAF/F20
➢ Arooj Fatima 603-FMS/BSAF/F20
➢ Aimen Sajid 606-FMS/BSAF/F20
➢ Aleena Khursheed 609-FMS/BSAF/F20
Submitted To:
Dr Tahira Awan

Chemical Industry of Pakistan

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TABLE OF CONTENTS
INTRODUCTION TO THE BUSINESS INDUSTRY ...................................................................... 4

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INTRODUCTION TO THE BUSINESS INDUSTRY

Historical background of chemical industry of Pakistan:

▪ The chemical industry in Pakistan traces its roots back to the early years of independence in 1947
when efforts were made to establish domestic manufacturing capabilities.
▪ Significant developments occurred in the 1960s and 1970s with the establishment of major
chemical plants, particularly in the fertilizers and petrochemical sectors.
▪ In the subsequent decades, the industry witnessed growth and diversification, with the emergence
of pharmaceutical, dye, paint, and plastic manufacturing companies.
▪ Over time, the chemical industry in Pakistan has evolved to meet the country's increasing demand
for chemical products and has contributed significantly to the national economy.

Definition & scope:

The chemical industry in Pakistan refers to the sector involved in the production, processing, and
distribution of various chemical products. It encompasses diverse segments such as petrochemicals,
fertilizers, pharmaceuticals, dyes, paints, plastics, and more. The industry plays a vital role in the
country's economy, contributing to GDP growth, employment generation, and export earnings. It serves
multiple sectors, including agriculture, manufacturing, healthcare, textiles, and construction, meeting
both domestic and international demand.

Importance and impact:

The Pakistani chemical industry holds significant importance
as it contributes to the country's economic growth, employment opportunities,
and export earnings. It supports various sectors such as agriculture,
manufacturing, pharmaceuticals, textiles, and construction, providing essential
raw materials and finished products. Additionally, the industry plays a crucial
role in meeting domestic demand, reducing dependency on imports, and fostering self-sufficiency in
chemical production.

OVERVIEW OF THE CURRENT BUSINESS LANDSCAPE

▪ Growing demand for chemical products, driven by increasing population, urbanization, and
industrialization.
▪ Competition among local and international players, with a significant presence of multinational
companies.

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▪ Government initiatives to promote the industry, such as tax incentives, investment

opportunities, and policy reforms.
▪ Rising concern for environmental sustainability, leading to a shift towards eco-friendly and
green chemicals.
▪ Technological advancements and innovation, enabling greater efficiency, productivity, and
quality in chemical production.
▪ Challenges related to energy and raw material costs, inadequate infrastructure, and compliance
with health and safety standards.

BUSINESS SECTOR: COMPANIES NAME AND LOCATIONS

Certainly! Here are some well-known companies in the chemical industry in Pakistan along with their
locations:
● Engro Corporation Limited - Karachi
● Fauji Fertilizer Company Limited – Rawalpindi
● Pakistan State Oil (PSO) - Karachi
● Pakistan Petroleum Limited (PPL) - Karachi
● ICI Pakistan Limited - Karachi
● Ferozsons Laboratories Limited - Lahore
● Attock Petroleum Limited - Rawalpindi
● Sitara Chemical Industries Limited - Faisalabad
● Descon Chemicals Limited - Lahore
● Ittehad Chemicals Limited - Lahore
● Archroma Pakistan Limited – Karachi

PRODUCTS
Pakistan's chemical industry produces a wide range of products, including basic chemicals,
specialty chemicals, and consumer products. Here are some examples of the products produced by the
chemical industry in Pakistan:
1. Basic chemicals:
o Caustic soda
o Hydrochloric acid
o Sulfuric acid Methanol
o Formaldehyde
2. Specialty chemicals:

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o Dyes and pigments

o Resins
o Adhesives
o Surfactants
o Textile Chemicals
3. Consumer products:
o Soaps and detergents
o Personal care products
o Home care products
o Pesticides and herbicides
o Pharmaceuticals
4. Plastics:
o Polyethylene
o Polypropylene
o PVC
o PET
5. Fertilizers:
o Urea
o DAP (diammonium phosphate)
o NPK (nitrogen, phosphorus, and potassium) fertilizers
These products are used in various industries, including textiles, pharmaceuticals, agriculture,
and construction. The chemical industry is a significant contributor to Pakistan's economy, and the
production of these products is expected to increase in the future as demand for chemical products
continues to grow in the country.
Uses of chemicals:
Chemicals imported and produced in Pakistan are used in various industries in the country. Some
of the major industries that consume chemicals in Pakistan include:
1. Textile industry: Pakistan is one of the largest producers of cotton in the world, and the textile
industry is a significant consumer of chemicals such as dyes, pigments, and finishing agents.
2. Agriculture: The use of fertilizers and agrochemicals is critical to the success of the agricultural
industry in Pakistan that is a major source of food and income.
3. Pharmaceuticals: The pharmaceutical industry in Pakistan requires a range of chemicals for the
production of various drugs.

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4. Construction: The construction industry requires a range of chemicals such as adhesives, sealants,
coatings, and waterproofing agents.
5. Automotive: The automotive industry in Pakistan makes use of chemicals such as lubricants, coolants,
and battery acids.
Chemical buyers:
Various industries buy chemicals in Pakistan, depending on their needs and requirements. Some of
the major industries that buy chemicals in Pakistan include:
▪ Textile industry: The textile industry is one of the leading consumers of chemicals in Pakistan,
and it uses chemicals like dyes, bleaches, and finishing agents.
▪ Pharmaceutical industry: The pharmaceutical industry requires a variety of raw materials and
chemicals to manufacture different drug formulations.
▪ Agriculture: The agriculture sector uses agrochemicals like pesticides and fertilizers.
▪ Paint industry: The paint industry consumes chemicals like pigments, solvents, and resins.
▪ Petrochemical industry: The petrochemical industry uses chemicals like methanol, ammonia,
and ethylene to produce plastics, synthetic fibers, and other materials.
▪ Food industry: The food industry uses chemicals like food additives, preservatives, and
flavorings.
▪ Automotive industry: The automotive industry requires chemicals like lubricants and coolant
for engines and other machine parts.
Quality Control and Analysis:
▪ Analytical Instruments: These include various tools for chemical analysis, such as
spectrophotometers, gas chromatographs, mass spectrometers, or pH meters, to ensure product
quality and compliance with standards.
▪ Laboratory Equipment: Ittehad Chemical Ltd may use a range of lab equipment like balances,
pipettes, titration devices, and glassware for sample preparation and analysis.
▪ Utilities: Boiler Systems: Boilers are used to generate steam, which is often required for heat
transfer or process operations.
▪ Cooling Systems: Cooling towers or chillers are employed to regulate process temperatures and
maintain optimal conditions.
▪ Storage Tanks: These are used to store raw materials, intermediate products, or finished goods
before packaging or shipment.

IMPORTS & EXPORTS OF CHEMICAL INDUSTRY

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Import:
Pakistan's chemical industry is heavily dependent on imports, as the country is not self-sufficient
in many chemicals. The major imported chemicals include basic chemicals, fertilizers, agrochemicals,
and pharmaceuticals. Pakistan mainly imports these chemicals from the Middle East, Europe, and China.
Pakistan's chemical industry imports a wide range of chemicals from various countries around the
world. Some of the major importing countries for the Pakistani chemical industry include
• China
• Saudi Arabia
• United Arab Emirates
• United States
• Qatar
• Kuwait

These countries are major suppliers of chemicals such as raw materials, intermediates, and finished
products to the Pakistani chemical industry.

Export:
On the other hand, the country is a net exporter of a few chemicals like cement, soda ash, and
caustic soda. The export of chemicals from Pakistan has been on the rise, with exports amounting to
approximately $1.1 billion in 2019. The major markets for chemical exports from Pakistan are
Afghanistan, Sri Lanka, Bangladesh, and the Middle East.

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Pakistan's chemical industry exports a wide range of chemicals to various countries around the world.
Some of the main export destinations include
• United States
• United Arab Emirates
• United Kingdom
• Germany
• Japan
• China
• South Africa
• Brazil
• Saudi Arabia
• Turkey

The exported chemicals include petrochemicals, polymers, agrochemicals, dyes and pigments,
pharmaceuticals, and other specialty chemicals.

Worth of chemical industry:

As of 2021, the chemical industry of Pakistan is worth approximately $4.7 billion USD. It is
considered one of the most significant industries in the country, employing a large number of workers
and contributing significantly to the national economy. The industry is expected to continue growing in
the coming years due to increasing demand for chemicals both domestically and internationally.
Globalization and International Trade:
Globalization has opened up opportunities for the chemical industry in Pakistan to participate in
international trade and expand its market reach. The industry has benefited from increased access to
global markets, allowing Pakistani chemical companies to export their products to other countries.

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International trade has facilitated the import of raw materials, equipment, and technologies
required for the chemical industry in Pakistan. This enables companies to access advanced technologies
and resources from around the world, supporting their growth and competitiveness.

MARKET DYNAMICS
Demand and Supply Forces:
Supply forces in the chemical industry are influenced by factors such as production capacity,
availability of raw materials, technological advancements, and government regulations on production
and import/export. In terms of supply, Pakistan's chemical industry is heavily dependent on imported
raw materials, as the country is not self-sufficient in many chemicals. This creates supply chain
challenges, including transportation costs and lead times, which can impact the availability and cost of
raw materials.
Demand forces in the chemical industry are driven by factors such as economic growth, industrial
activity, consumer demand for chemical products, and emerging markets. The demand for chemicals in
Pakistan has been increasing rapidly due to the growth of various industries, such as textiles,
pharmaceuticals, agriculture, and automotive. However, the country's chemical industry faces challenges
related to the supply of raw materials and the availability of adequate infrastructure and technology.
Demand and supply lead to the price setting.
Price setting:
In Pakistan, prices in the chemical industry are generally set according to the demand and
supply of each particular chemical. When the demand for a particular chemical is high and supply is
low, prices tend to rise, and when demand is low and supply is high, prices tend to fall. The demand
for chemicals is driven by several factors such as the growth of various industries that rely on chemicals,
including textiles, pharmaceuticals, agriculture, and automotive. Additionally, government policies and
decisions can impact the demand for chemicals. On the supply side, key factors that influence pricing
include the availability of raw materials, access to infrastructure and logistics, and regulations and
policies that impact production and distribution. Pricing decisions are also influenced by global market
trends and fluctuations in the supply and demand of chemicals at the international level.
Demand-Supply curve:

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To address these challenges, the chemical industry in Pakistan is focusing on improving local
production capabilities, increasing investment in research and development, and building stronger
partnerships with foreign companies to improve technology transfer and access to raw materials. With
these efforts, the sector aims to meet the growing demand for chemicals in the country and become a
more competitive player in the global market.

INDUSTRY LIFE CYCLE

The chemical industry of Pakistan can be analyzed in terms of the industry life cycle, which
describes the various stages of an industry from its emergence to its decline. Here is an overview of how
the chemical industry in Pakistan has progressed through the different stages of the life cycle:
❖ Startup: The chemical industry in Pakistan emerged in the 1950s and 1960s, with the
establishment of several small-scale chemical plants. These plants produced basic chemicals,
such as caustic soda, sulfuric acid, and chlorine.
❖ Growth: During the 1970s and 1980s, the chemical industry in Pakistan experienced rapid
growth, driven by increased demand for chemicals from various sectors, including agriculture,
textiles, and pharmaceuticals. The industry diversified its product portfolio, and several large-
scale chemical plants were established during this period.
❖ Maturity: In the 1990s and 2000s, the chemical industry in Pakistan entered the maturity stage.
The industry continued to grow, but at a slower rate, and consolidation occurred as smaller
companies were acquired or merged with larger companies. The industry also faced increased
competition from imported chemicals.
❖ Decline: In recent years, the chemical industry in Pakistan has faced several challenges,
including rising energy costs, competition from imports, and government regulations. As a result,

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some smaller chemical plants have closed down, and the industry has experienced a decline in
growth.
Overall, the chemical industry in Pakistan has progressed through the various stages of the industry
life cycle, and it is currently facing challenges as it tries to maintain its competitiveness in a global
market. However, the industry has shown resilience and continues to play a significant role in the
country's economy.

FUTURE GROWTH OPPORTUNITIES OF CHEMICAL INDUSTRY.

The chemical industry is expected to continue experiencing growth opportunities in the future, driven
by various factors such as increasing global population, urbanization, and rising demand for consumer
goods. Here are some of the growth opportunities that the chemical industry can expect in the coming
years:
1. Sustainability and green chemistry: The chemical industry is focusing more on developing
sustainable practices and environmentally friendly products. This includes using renewable resources
and reducing waste and emissions. As consumers become more aware of the impact of their
purchasing decisions on the environment, there will be an increased demand for sustainable and
green products.
2. Digitalization and automation: The chemical industry is embracing digitalization and automation
to optimize production processes and improve efficiency. This includes the use of sensors, machine
learning, and artificial intelligence to monitor and control manufacturing processes, reduce
downtime, and minimize waste.
3. New materials and technologies: The chemical industry is constantly developing new materials and
technologies, such as advanced polymers and composites, that offer improved performance and

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functionality. These materials and technologies are finding applications in a wide range of industries,
from automotive and aerospace to healthcare and electronics.
4. Emerging markets: Emerging markets, particularly in Asia and Africa, are experiencing rapid
economic growth and urbanization. This is creating a growing demand for chemicals and materials,
particularly in the construction, automotive, and consumer goods sectors.
5. Healthcare and pharmaceuticals: The chemical industry is playing an increasingly important role
in the healthcare and pharmaceutical sectors, with the development of new drugs, vaccines, and
medical devices. As the global population ages and demand for healthcare services increases, the
chemical industry is expected to see continued growth in this area.

Overall, the chemical industry is likely to experience significant growth opportunities in the coming
years, driven by sustainability, digitalization, new materials and technologies, emerging markets, and
healthcare and pharmaceuticals.

RESEARCH AND DEVELOPMENT

The chemical industry in Pakistan is an important contributor to the national economy, providing
arrange of critical raw materials to various industries, including textiles, agriculture, and personal care
products. In recent years, the industry has been focused on research and development efforts to improve
production efficiency, reduce costs, and develop new chemical products with higher value-added
capabilities.

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One of the key trends in the Pakistani chemical industry is the shift toward sustainable
manufacturing practices. This includes the development of eco-friendly and biodegradable products,
changing production processes to reduce waste and energy consumption, and investing in renewable
energy sources.
The Government of Pakistan has been supportive of the industry’s research and development
efforts through various policy initiatives and funding schemes. The National Research Program for
Universities, the Innovation Challenge Fund, and the Small and Medium-Sized Enterprises Development
Authority are some of the programs that offer financial support to innovative SMEs and research
institutions.
In conclusion, the chemical industry in Pakistan has been active in its efforts to remain
competitive globally through research and development initiatives. These efforts have been supported
by the government, which recognizes the importance of a strong chemical industry to the country’s
economy.
GLOBAL COMPARISON
The chemical industry in Pakistan has been growing steadily over the past few years and has
emerged as a major contributor to the country's economy. However, when compared to other countries,
Pakistan's chemical industry is still relatively small. The chemical industry in Pakistan is a relatively
small industry that is primarily focused on the production of basic chemicals, such as fertilizers, caustic
soda, and sulfuric acid. The industry is dominated by a few large players, including Engro Corporation,
Fauji Fertilizer, and Fatima Group. According to the Pakistan Chemicals and Dyes Merchants
Association, the total annual production of the chemical industry in Pakistan is around 4.5 million tons,
and it contributes around 1.3% to the country's GDP.
Compare GDP Growth Rate with Foreign Countries.
According to data from the World Bank, Pakistan's chemical industry accounted for
approximately 4.4% of the country's GDP in 2020, which is lower than the global average of 5.7%. In
comparison to other countries in the region, such as India and China, Pakistan's chemical industry is
much smaller. India's chemical industry accounted for 7.3% of its GDP in 2020, while China's chemical
industry accounted for 11.6% of its GDP in 2019.
Compare Exports with Foreign Countries.
In terms of exports, Pakistan's chemical industry is also relatively small. According to data from
the Pakistan Bureau of Statistics, chemical and pharmaceutical products accounted for approximately
7.6% of Pakistan's total exports in 2020. In comparison, chemical exports accounted for 15.8% of India's
total exports in 2020 and 12.9% of China's total exports in 2019.

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Despite these challenges, Pakistan's chemical industry has been growing steadily and has shown
potential for further growth. The government has taken several initiatives to promote the chemical
industry, such as providing tax incentives, establishing special economic zones, and promoting research
and development in the sector. These measures, coupled with Pakistan's strategic location and access to
raw materials, could help the country's chemical industry to compete globally in the coming years.

MAJOR VARIANTS
The chemical industry in Pakistan is a diverse sector that encompasses various sub-sectors,
including basic chemicals, specialty chemicals, and agrochemicals. Here are some of the major variants
of the chemical industry in Pakistan.
▪ Fertilizer industry:
One of Pakistan's most important sub-sectors of the chemical industry is the fertilizer industry. It
involves the manufacturing of urea, ammonium phosphate (DAP), single superphosphate (SSP), and
other agricultural fertilizers. Engro Fertilizers, Fauji Fertilizer Company, Fatima Fertilizer Company,
Dawood Hercules Corporation these industries play an important role.
▪ Petrochemical sector:
Pakistan's petrochemical sector manufactures a wide range of goods, including polyethylene,
polypropylene, PVC, and other petrochemicals. The building industry, which accounts for around 70%
of global use, is what drives the need for PVC. PVC is mostly utilized in Pakistan to create pipes, fittings,
cables, profiles, and footwear. Additionally, it is utilized in consumer items, packaging, and medical
devices. These items are utilized in a wide range of industries, including packaging, construction, and
automobile.
▪ Pharmaceutical business
Pakistan's pharmaceutical business manufactures drugs, vaccines, and other healthcare items. The
government actively regulates this business to guarantee that the goods are safe and effective. Abbott
Laboratories Pakistan (ABT), Getz Pharma, GlaxoSmithKline Pakistan (GSK), Searle Pakistan
(SEARL), and Karachi Chemical Industries (KCI Pharma)
▪ Paints and Coatings business
Pakistan's paints and coatings business provides a wide range of goods such as ornamental paints,
industrial coatings, and marine coatings. Sodium carbonate, often known as soda ash, is a chemical
compound used in the production of glass, detergents, paper, textiles, and other goods. Natural resources
like rock salt and limestone are the main sources of its production in Pakistan. These materials are
employed in a variety of applications, including house interiors and heavy-duty industrial equipment.
▪ Textile Industry

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Pakistan's textile industry is one of the country's largest and most significant industries. Textile
production, comprising cotton, silk, and synthetic fibers, as well as dyeing and finishing procedures, are
all part of the business.
▪ Agrochemical business
Pakistan's agrochemical business manufactures a variety of goods, including pesticides, herbicides,
and fungicides. These products are used to protect crops against pests and diseases, as well as to increase
agricultural yields.
▪ Basic chemical industry in Pakistan
The basic chemicals industry in Pakistan involves the manufacture of chemicals such as sulfuric acid,
caustic soda, and chlorine. Textiles, paper, and plastics are among the industries that employ these
compounds.
The chemical industry in Pakistan is diversified and expanding, producing a range of goods for many
industries. Consumers purchase tens of thousands of chemical items each day, according to the Pakistan
Chemical Manufacturers Association (PCMA). Overall, the chemical industry in Pakistan is a significant
contributor to the country's economy, providing employment and contributing to the growth of various
other industries.
PESTLE ANALYSIS:
PESTEL analysis is a framework used to analyze the macro-environmental factors that impact a
particular industry. In this case, let's analyze the chemical industry in Pakistan using PESTEL.
▪ Political Factors:
The chemical industry in Pakistan is governed by government rules and policies. The government
controls the import and export of chemicals, as well as the safety rules and taxation. According to the
import data, Pakistan imports $523.4 million in inorganic chemicals and $2.4 billion in organic
chemicals. The availability of raw resources and the ease of conducting business in the country are also
influenced by government policy. Sometimes political instability gave negative affect to chemical
industry.
▪ Economical Factors:
Pakistan's economic stability has an impact on the expansion of the chemical sector. Inflation,
GDP growth, currency exchange rates, and disposable income all have an influence on chemical demand.
Pakistan's chemical sector has a substantial impact on the country's economy, accounting for around
4.5% of total exports and approximately 12% of total imports.
▪ Social factors:
Chemical demand is influenced by sociocultural variables such as population demographics,
education levels, and lifestyle trends. No organization can overlook the significance of society and

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culture. The social and production systems in a given region should be in perfect harmony. With this
match, we will be able to gain a lot of goodwill. Pakistan's population is rapidly increasing. For example,
Pakistan's expanding population raises demand for agricultural chemicals. There is a discrepancy
between labor demand and labor supply, which allows businesses to benefit from reduced labor costs.
They must invest a lot of time and money in their training because they are unskilled and novice workers.
▪ Technological factors
Technological improvements in Pakistan's chemical sector can have a substantial influence on
the industry's growth. Technological advancements may increase the efficiency of manufacturing
processes, lower production costs, and enable the development of new goods. Rapid development and
technical advancements have intensified competition. In the Pakistani industry, antiquated machinery is
used.
▪ Environmental factors
Environmental variables such as climate change, pollution, and waste management rules have an
influence on the chemical sector in Pakistan. To reduce environmental effect, the industry must follow
environmental rules. But in many situations, do not follow the environment rules due to cause the air
pollution.
▪ Legal Aspects:
Pakistan's chemical sector is governed by legal and regulatory frameworks such as lab our regulations,
intellectual property protection, and contract law. The legal framework impacts industrial operations and
establishes company liability in the event of a legal issue.

In conclusion; the chemical industry in

Pakistan faces numerous challenges and
opportunities resulting from the PESTEL factors
mentioned above. The industry can leverage
technological advancements to improve efficiency,
comply with environmental regulations, and tap into
the growing demand for chemicals due to population
growth.
However, the industry also faces challenges in
navigating the legal framework, complying with
environmental regulations, and managing economic
instability.
COMPETETION LEVEL

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Porter’s 5 forces model:

The Porter's Five Forces Model may be used to assess the degree of competition in the Pakistan chemical
industry:
▪ Threat of new arrivals
New
▪ Supplier negotiating power arrivals

▪ Buyers’ negotiating power

▪ Substitute danger Buyers
power Five Supplier
power

▪ Competitive rivalry Forces

1) Threat of new arrivals Model
Due to the necessity for large financial investment, Substitute
Competitive Danger
access to raw materials, and tight regulatory compliance, the Rivarly

chemical sector in Pakistan has a high entrance barrier. As a

result, the threat of new entrants is modest.
2) Supplier negotiating power
Supplier bargaining power in the Pakistan chemical sector is modest since most raw materials
are imported, and suppliers may affect costs and quality.
3) Buyers' negotiating power
It is significant since the Pakistan chemical sector is extremely fragmented, and buyers have
numerous choices to select from. Furthermore, because switching costs are minimal, purchasers
frequently have great negotiating leverage.
4) Substitute danger
The threat of replacements is minimal in the Pakistan chemical industry since the industry is vital
to the economy and supplies crucial inputs to many other industries.
5) Competitive rivalry
The Pakistan chemical sector is extremely competitive, with many small and major businesses
competing for market share. To acquire market share, industry competitors compete on price, quality,
and innovation. However, the industry is highly fragmented, with no single company commanding a
sizable proportion.
In summary, the Pakistan chemical industry faces moderate to high competition levels, with a
low threat of new entrants, moderate bargaining power of suppliers, high bargaining power of buyers,
low threat of substitutes, and. highly competitive rivalry.

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ITTEHAD CHEMICAL LTD

Ittehad Chemical Ltd is a leading chemical company based in Pakistan. Established in 1962,
Ittehad Chemical has grown to become one of the country's most prominent manufacturers and suppliers
of a wide range of chemical products. The company is known for its commitment to quality, innovation,
and sustainability in the chemical industry. Ittehad Chemical offers a diverse portfolio of products that
cater to various sectors, including textiles, agriculture, pharmaceuticals, construction, and more. Some
of their key product categories include fertilizers, textile auxiliaries, sulfuric acid, hydrogen peroxide,
and industrial chemicals.
With a focus on customer satisfaction, Ittehad Chemical emphasizes the use of advanced
technologies and best practices to deliver high-quality products that meet international standards. The
company places great importance on research and development, continuously striving to develop
innovative solutions and improve their product offerings. Ittehad Chemical is also dedicated to
sustainability and environmental stewardship. They have implemented eco-friendly manufacturing
processes and adhere to stringent safety and environmental standards to minimize their impact on the
environment.

Overview of Products or Services Offered:

Ittehad Chemical Ltd offers a diverse portfolio of chemical products that cater to the needs of
multiple sectors. Their product range includes [Fertilizers and Crop Nutrition, Industrial Chemicals,
Textile Chemicals, Specialty Chemicals], which are known for their superior quality, reliability, and
effectiveness. They continuously innovate and expand their product line to meet the evolving demands
of their customers.
o Company Vision:
An ‘’ITTEHAD’’ of Pakistan’s best Talent & Technology that serves as a catalyst to deliver
sustainable chemical products to its customers thus optimizing returns for investors.
o Company Mission:
Key ingredients of ICL Mission are:
• Create an environment to attract and retain the best talent

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• Optimize cost and securitize energy through latest technology

• Serving the customers to their satisfaction levels
• Ensuring that we are environment friendly & Zero injury company
• CSR is our forte
o Company core values:
o Integrity: We conduct ourselves in accordance with the highest moral and ethical
standards, and in full compliance with all applicable laws.
o Respect: We treat our employees and all our stakeholders with professionalism, respect
and dignity, creating an environment where people can express their professional
opinions, contribute, innovate and excel.
o Teamwork: We are committed to promoting a culture of teamwork and cooperation
among our employees to enhance their productivity and well-being.
o Accountability: We hold ourselves accountable for our actions to our employees, our
management, our shareholders and to the community that we operate in.

SWOT ANALYSIS.
SWOT analysis is a strategic planning tool that helps organizations identify their strengths,
weaknesses, opportunities, and threats. Here's a SWOT analysis of the chemical industry:

Strengths:
1. Diversified Product Portfolio: Ittehad Chemicals Ltd. offers a wide range of products, including
basic chemicals, specialty chemicals, and consumer products. This diversification helps the
company to reduce the risk of dependence on a single product.
2. Strong Market Position: The company has a strong market position in Pakistan's chemical
industry. It has a significant market share in many of its products.

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3. Experienced Management Team: The management team of Ittehad Chemicals Ltd. is

experienced and knowledgeable. They have a good track record of making sound business
decisions.
4. Efficient Manufacturing Facilities: The company has state-of-the-art manufacturing facilities
that use modern technology and equipment. This enables the company to produce high-quality
products at a lower cost.
Weaknesses:
1. Dependence on Raw Materials: Ittehad Chemicals Ltd. depends on imported raw materials for
the production of many of its products. This dependence on imports exposes the company to
foreign exchange rate risk.
2. Limited Geographic Presence: The company's operations are limited to Pakistan. This limits
its growth potential as it cannot tap into other markets.
3. Dependence on Few Customers: Ittehad Chemicals Ltd. has a few customers who account for
a significant portion of its revenue. This makes the company vulnerable to the loss of a major
customer.
Opportunities:
1. Expansion into New Markets: Ittehad Chemicals Ltd. can explore opportunities to expand into
new markets, such as the Middle East and Africa. This would enable the company to diversify
its customer base and reduce its dependence on Pakistan's market.
2. Investment in Research and Development: The company can invest in research and
development to develop new products that can meet the needs of its customers.
3. Increasing Demand for Chemical Products: The demand for chemical products is increasing
in Pakistan and other developing countries. This presents an opportunity for Ittehad Chemicals
Ltd. to increase its production capacity and capture a larger market share.
Threats:
1. Intense Competition: Ittehad Chemicals Ltd. faces intense competition from both local and
international companies. This puts pressure on the company to maintain its market share.
2. Volatility in Raw Material Prices: The prices of raw materials are subject to volatility due to
global market conditions. This can impact the company's profitability and margins.
3. Changes in Government Regulations: The company is subject to government regulations, and
changes in regulations can impact its operations and profitability.

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VALUATION
Date Ittehad KSE prices Return Ittehad Return KSE
04-01-23 36 41,580.85 - -
03-01-23 32.03 40,000.83 -0.110277778 -0.0379987
02-01-23 34 40,510.37 0.061504839 0.01273824
01-01-23 31 40,673.06 -0.088235294 0.00401601
12-01-22 27.5 40,420.45 -0.112903226 -0.0062107
11-01-22 27.4 42,348.63 -0.003636364 0.04770308
10-01-22 29 41,264.66 0.058394161 -0.0255963
09-01-22 28.55 41,128.67 -0.015517241 -0.0032956
08-01-22 32.31 42,351.15 0.131698774 0.0297233
07-01-22 29.7 40,150.36 -0.080779944 -0.0519653
06-01-22 29.87 41,540.83 0.005723906 0.03463157
05-01-22 30.55 43,078.14 0.022765316 0.0370072
04-01-22 28.37 45,249.41 -0.071358429 0.05040306
03-01-22 27.5 44,928.83 -0.030666197 -0.0070847
02-01-22 28.15 44,461.01 0.023636364 -0.0104125
01-01-22 30.4 45,374.68 0.079928952 0.02054992
12-01-21 25.93 44,596.07 -0.147039474 -0.0171596
11-01-21 23.67 45,072.38 -0.087157732 0.01068054
10-01-21 25.37 46,218.93 0.07182087 0.02543797
09-01-21 25.44 44,899.60 0.002759164 -0.0285452
08-01-21 31.51 47,419.74 0.238600629 0.05612834
07-01-21 30.7 47,055.29 -0.025706125 -0.0076856
06-01-21 32.23 47,356.02 0.049837134 0.00639099
05-01-21 33.51 47,896.34 0.039714552 0.01140974
04-01-21 27.1 44,262.35 -0.191286183 -0.075872
03-01-21 29.19 44,587.85 0.077121771 0.00735388
02-01-21 34.95 45,865.02 0.197327852 0.0286439
01-01-21 30.83 46,385.54 -0.11788269 0.01134895
12-01-20 27.11 43,755.38 -0.120661693 -0.0567022
11-01-20 25.33 41,068.82 -0.065658429 -0.0613995
10-01-20 29.31 39,888.00 0.157125938 -0.0287522
09-01-20 23.37 40,571.48 -0.202661208 0.01713498
08-01-20 25.56 41,110.93 0.093709884 0.01329629
07-01-20 26.5 39,258.44 0.036776213 -0.0450608
06-01-20 22.32 34,421.92 -0.157735849 -0.1231969
05-01-20 23.72 33,931.23 0.062724014 -0.0142552
Monthly Average Return -1% -1%
Monthly Variance 1% 0%
Monthly Standard Deviation 11% 4%
Annual Return -7% -6%
Annual Variance 14% 2%
Annual Standard Deviation 37% 13%
Coefficient of Variation (Annual) 5.29 6.29
Covariance Ri and Rm 0.00193945

Intrinsic value 49.7 market value 40.20 recommended to buy

 23

∑𝑅 ̅ 𝒊)𝟐
∑(𝐑𝐢−𝑹
𝑅̅ i = = -0.07 = -7% 𝜎 i2 = = 0.14 = 14%
𝑛 𝑛

𝜎i = √0.14 = ± 0.37 = ±37%

∑𝑅 ̅ 𝒊)𝟐
∑(𝐑𝐢−𝑹
𝑅̅m = = -0.06 = -6% 𝜎m2 = = 0.02 = 2%
𝑛 𝑛

𝜎m = √0.02 = ± 0.13 = ±13%

• Relative risk of Ittehad Chemicals ltd.

𝜎 0.37
Coefficient of variation = R = −0.07 = 5.29

• Systematic risk of Ittehad Chemicals ltd.

Co.variance Ri ,Rm ∑(𝐑𝐢−𝐑𝐢).(𝐑𝐦−𝐑𝐦) 0.001939

βi = = = = 0.09695
𝜎𝑚2 𝜎𝑚2 0.02

• Unsystematic Risk of Ittehad Chemicals ltd.:

𝜎i2 = βi2 𝜎m2 + 𝜎e2
𝜎e2 = 𝜎i2 - βi2 𝜎m2
𝜎e2 = 0.13 – (0.09695)2 (0.02)

𝜎e = √0.1298 = ±0.3602 = ±36.02%

• Downside risk of Ittehad Chemicals ltd.:
Date Return Ittehad
03-01-23 -0.110277778
01-01-23 -0.088235294
12-01-22 -0.112903226
11-01-22 -0.003636364
09-01-22 -0.015517241
07-01-22 -0.080779944
04-01-22 -0.071358429
03-01-22 -0.030666197
12-01-21 -0.147039474
11-01-21 -0.087157732
07-01-21 -0.025706125
04-01-21 -0.191286183

Intrinsic value 49.7 market value 40.20 recommended to buy

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01-01-21 -0.11788269
12-01-20 -0.120661693
11-01-20 -0.065658429
09-01-20 -0.202661208
06-01-20 -0.157735849
Monthly Variance 0.003410297
Annual Variance 0.04092357
Annual Standard Deviation 0.202295749

̅ 𝒊)𝟐
∑(𝐑𝐢−𝑹
𝜎 i2 = = 0.0409 = 4.09%
𝑛

𝜎i = √0.0409 = ± 0.2022 = ±20.22%

1 year Portfolio with OGDCL
Here, we have made our portfolio with another stock that is OGDCL. We have invested 55% in Ittehad
and 45% in OGDCL. We have calculated return on portfolio and risk of portfolio as follows.
HPR
Date Ittehad HPY ogdcl
OGDCL Ri Rog HPR Ittehad HPY Ittehad ogdcl
04-01-23 36 85.97 - - - - - -
03-01-23 32.03 82.75 -0.1102 -0.03745 0.88972 -0.1102 0.96 -0.04
02-01-23 34 82 0.0615 -0.00906 1.06150 0.06150 0.99 0.01
01-01-23 31 87.94 -0.0882 0.07243 0.91176 -0.08823 1.07 0.07
12-01-22 27.5 79.66 -0.1129 -0.09416 0.88709 -0.1129 0.91 -0.09
11-01-22 27.4 72.3 -0.0036 -0.09239 0.9963 -0.0036 0.91 -0.09
10-01-22 29 69.97 0.0583 -0.03223 1.0583 0.0583 0.97 -0.03
09-01-22 28.55 75.72 -0.0155 0.08217 0.98448 -0.0155 1.08 0.08
08-01-22 32.31 82.75 0.1316 0.09284 1.1316 0.1316 1.09 0.09
07-01-22 29.7 80.42 -0.0807 -0.02816 0.91926 -0.08077 0.97 -0.03
06-01-22 29.87 78.9 0.0057 -0.0189 1.0057 0.0057 0.98 -0.02
05-01-22 30.55 80.67 0.0227 0.02243 1.02276 0.0227 1.02 0.02
Monthly Average
Return -1% 0%
Monthly Variance 1% 0%
Monthly Standard
Deviation 8% 6%
Annual Return -14% -5%
Annual Variance 8% 5%
Annual Standard
Deviation 27% 22%
CoVariance 0.00

∑ 𝐻𝑃𝑌
𝑅̅ i = -0.14 𝑅̅ o = -0.05 A.M= G.M= (𝜋 𝐻𝑃𝑅)1/n -1
𝑛

𝜎i2 = 0.08 𝜎o2 = 0.05 A.M =

−0.1312 G.M = (0.8627)1/11 -1
11
𝜎o = ±0.22 G.Mittehad= -0.0133 = -
𝜎i = ±0.27 A.Mittehad = -0.01199 = -
1.33%
1.19%
G.Mogdcl = 0.577%
A.M = 0%

Intrinsic value 49.7 market value 40.20 recommended to buy

 25

If we have invested 45% in OGDCL then,

wi = 1 – 0.45 = 0.55 wo = 0.45
• Portfolio Risk:
̅ 𝒊).𝐑𝐨−𝑹
∑(𝐑𝐢−𝑹 ̅ 𝒐)
Rp = wiRi + woRo 𝜎1,2= 𝑛
Rp = (0.55*-0.14) + (0.45*-0.05) 0.0
𝜎1,2= 6
Rp = -0.0995 = -10%
𝜎1,2=0.0
• Portfolio Return:
𝜎p2 = wi2 𝜎i2 + wo2 𝜎o2+ 2w1w2𝜎1,2
𝜎p2 = (0.55)2(0.08) + (0.45)2(0.05) + 2(0.55)(0.45)(0.0)
𝜎p2 = 0.0242 + 0.01012 + 0
𝜎p = √0.03432
𝜎p = ±0.1852 = ±18.52%
Efficient Portfolio Frontier:

W1 W2 Return Risk
0% 100% 0.05 0.223607
10% 90% 0.059 0.203224 Efficient Portfolio Frontier
20% 80% 0.068 0.187617 0.16
30% 70% 0.077 0.178045 0.14
40% 60% 0.086 0.175499 0.12
50% 50% 0.095 0.180278 0.1
55% 45% 0.0995 0.18527 0.08
60% 40% 0.104 0.191833 0.06

70% 30% 0.113 0.04

0.209045
80% 20% 0.122 0.02
0.230651
0
90% 10% 0.131 0.255539 0 0.05 0.1 0.15 0.2 0.25 0.3
100% 0% 0.14 0.282843

Intrinsic value of share:

Dividend based models (constant growth)
∑𝒈 𝟎.𝟗𝟑𝟓𝟔𝟔𝟒
Average growth = = = 0.15599
𝒏 𝟔
𝐃𝐨(𝟏+𝐠) 𝟏(𝟏+𝟎.𝟏𝟓𝟓𝟗𝟗)
Po = =
𝐊𝐞 − 𝐠 𝟎.𝟕−𝟎.𝟏𝟓𝟓𝟗𝟗
Ke = Rf + (Rm-Rf).b
Po = 1.8135
Ke =0.1558 + (-0.06-0.1558) * 0.09695
Ke = 0.135 = 13.5%

Intrinsic value 49.7 market value 40.20 recommended to buy

 26

Ratio Analysis:
2022 2021 2020
Gross Profit Margin 13.17 16.95 13.34
Net Profit Margin 2.64 5.9 0.69
ROE 11.4 20.01 1.99
Price Earnings Ratio 7.2 4.91 36.6
Debt to Equity 0.51 0.51 0.6
Current Ratio 0.99 1.05 1.18
Quick Ratio 0.53 0.64 0.74
Interest Coverage ratio 3.01 4.85 1.03
Debtor Turnover 10.28 11.25 13.05
Inventory turnover 5.11 5.91 6.95
Dividend Payout 24.12 30.45 139.31
Bonus Shares 18.06 _ _
Dividend per share 1 2 1
Earnings per share 4.15 6.57 0.72

Financial Highlights:
Income Statement:
2022 2021 2020
Sales 15,681,372 11,123,793 8,856,601
Gross profit 2,064,777 1,885,509 1,181,643
operating profit 992,781 1,093,005 496,032
EBT 764,049 980,110 77,727
profit/loss 414,539 656,767 60,800

Balance Sheet:
2022 2021 2020
Current Assets 5,706,353 3,804,882 2,968,161
noncurrent/fixed assets 7,158,708 6,504,901 6,172,395
Total Assets 12,865,061 10,309,783 9,140,556
Current liabilities 5,774,596 3,638,600 2,507,780
Long term liabilities 1,909,447 1,796,789 2,578,972
Shareholder's Equity 5,181,018 4,874,394 4,053,804

Intrinsic value 49.7 market value 40.20 recommended to buy

 27

Total Liabilities and equity 12,865,061 10,309,783 9,140,556

Share Capital 1,000,000 847,000 847,000

Horizontal and Vertical Analysis:

❖ Income Statement:

Vertical Analysis
Sales 100 100 100
CGS -86.83293146 -83.04976549 -86.65805313
Gross Profit 13.16706854 16.95023451 13.34194687

Selling and distributive expense -5.139225063 -5.182593743 -5.657260613

General and administrative expense -1.563307088 -1.803188894 -2.351985824
Other operating expenses -0.516523682 -0.968293818 -0.684935451
Other income 0.382944809 0.829672037 0.952938944
Operating Profit 6.330957521 9.825830092 5.600703927

Financial Charges -2.104292915 -2.026242308 -5.421718784

Fair value gain on investment 0.645670545 1.01134568 0.69863145
Profit before taxation 4.87233515 8.810933465 0.877616594

Taxation -2.228822835 -2.906769301 -0.191122983

Net Profit 2.643512315 5.904164164 0.686493611

Horizontal Analysis
Sales 177.0585804 125.5988951 100
CGS 177.4158894 120.3691799 100
Gross Profit 174.7378015 159.5667219 100

Selling and distributive expense 160.84532 115.0606437 100

General and administrative expense 117.6864805 96.29247357 100
Other operating expenses 133.5234578 177.5592628 100
Other income 71.15216 109.3521173 100
Operating Profit 200.1445471 220.3496952 100

Financial Charges 68.72047982 46.93968928 100

Fair value gain on investment 163.6363636 181.8181818 100
Profit before taxation 982.9904666 1260.964658 100

Taxation 2064.807704 1910.220358 100

Net Profit 681.8075658 1080.208882 100

Intrinsic value 49.7 market value 40.20 recommended to buy

 28

❖ Balance Sheet:
Vertical Analysis
2022 2021 2020
ASSETS
NON-CURRENT ASSETS 55.64457098 63.09445116 67.52756616
CURRENT ASSETS 44.35542902 36.90554884 32.47243384
TOTAL ASSETS 100 100 100
EQUITY AND LIABILITIES 40.27200493 47.27930743 44.3496435
SHARE CAPITAL AND RESERVES 14.84211385 17.42800018 28.21460751
NON-CURRENT LIABILITIES 44.88588123 35.29269239 27.43574899
CURRENT LIABILITIES 44.88588123 35.29269239 27.43574899
TOTAL EQUITY AND LIABILITIES 100 100 100

Horizontal Analysis
2022 2021 2020
ASSETS
NON-CURRENT ASSETS 115.9794213 128.1898792 100
CURRENT ASSETS 192.2521386 128 100
TOTAL ASSETS 140.747029 113 100
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES 127.8063271 120 100
NON-CURRENT LIABILITIES 74.03907448 70 100
CURRENT LIABILITIES 230.2672483 145 100
TOTAL EQUITY AND LIABILITIES 140.747029 113 100

Intrinsic value 49.7 market value 40.20 recommended to buy