ZIL Limited

ZIL Limited (PSX: ZIL) was incorporated in Pakistan as a private limited company in 1960 and then was converted into a public limited company in 1986. The company is engaged in the manufacturing and sale of home and personal care products. Some of the flagship brands of ZIL include Capri, Opal and HYPro. Pattern of Shareholding As of December 30, 2025, ZIL has a total of 6.123 million shares outstanding which are held by 1315 shareholders. During the current year TWF Holding L.L.C-FZ Dubai had acquired 84.84% shares of ZIL from NFCI General trading LLC to become the holding company of ZIL. This was followed by directors, CEO, their spouse and minor children holding 10.056 percent shares. Local general public accounts for 4.13 percent shares of ZIL. The remaining shares are held by other categories of shareholders. Historical Performance (2019-24) ZIL’s topline posted unabated growth over the period under consideration. Conversely, its bottomline didn’t follow the similar trajectory. It posted staggering growth in 2019 followed by decline for the next two years which culminated into net loss in 2021. In the subsequent two years, the bottomline posted tremendous growth followed by a decline in 2024. In 2025, ZIL’s bottomline slightly ticked up. ZIL’s margins also took the same course as its bottomline. The detailed performance review of the period under consideration is given below. 2019 appears to be the most fortunate year for ZIL as not only did its topline boasted a tremendous growth of 27.89 percent year-on-year, the bottomline proved to be even more stunning boasting a robust 135.36 percent year-on-year growth. ZIL’s net sales clocked in at Rs.2423.19 million in 2019. The topline growth was the result of higher volumes coupled with price increase. The major growth propeller was the high volumetric growth of ZIL’s flagship brand Capri. During the year, the company also enhanced the brand equity of Capri by re-launching hand-wash in modern trade and a new variant of Capri i.e. Capri Velvet Orchid soap. High volumetric sales led to an increase in the cost of sales which was further pushed by inflation. ZIL’s gross profit posted 33.55 percent year-on-year growth with GP margin clocking in at 29.58 percent in 2019 versus GP margin of 28.33 percent recorded in the previous year. Distribution expense grew by 11.74 percent in 2019 on the back of higher freight charges, advertising expense as well as payroll expense. Administrative expense escalated by 38.47 percent in 2019 on account of higher salaries disbursed during the year. The company recorded 96 percent stronger operating profit in 2019 with OP margin clocking in at 6.25 percent versus OP margin of 4 percent recorded in the previous year. Financial charges surged by 43 percent in 2019 mainly on the back of higher discount rate and financial charges on assets acquired under lease arrangements and financial charges on liability against right-of-use assets. The bottomline was recorded at Rs.65.74 million in 2019, up 135.36 percent year-on-year. This translated into NP margin of 2.71 percent in 2019 as against NP margin of 1.47 percent recorded in 2018. EPS grew from Rs.4.56 in 2018 to Rs.10.74 in 2019. Followed by an affluent 2019, 2020 proved to be a dull year on the back of unprecedented outspread of COVID-19 and its effect on the customer base. The volumes showed some resilience in the 2HCY20 as the company introduced new variants of personal wash category and undertook price adjustments. ZIL’s topline posted a marginal 0.84 percent year-on-year growth in 2020 to clock in at Rs.2443.46 million. Supply chain impediments and increase in the prices of raw materials pressured the margins. Gross profit slid by 16.35 percent year-on-year in 2020 with GP margin clocking in at 24.54 percent. Hindered mobility of sales staff coupled with lower advertising budget allocated for the year streamlined the distribution expense by 3 percent in 2020. Administrative expense also slumped by 5.39 percent in 2020 primarily due to lower travelling and conveyance charges incurred during the year. Other income posted year-on-year growth of 98.69 percent in 2020 particularly on the back of scrap sales and amortization of government grant. Other expense dwindled by 44.50 percent in 2020 due to lower profit related provisioning and lesser impairment against operating fixed assets booked during the year. ZIL recorded 55.44 percent thinner operating profit in 2020 with OP margin sliding down to 2.76 percent. Finance cost ticked down by 36 percent in 2020 on the back of discount rate cuts during the year. The debt-to-equity ratio of the company ballooned to 109 percent during the year as the company secured long-term refinancing loan for the payment of salaries and wages during the year. Despite stringent cost control mechanisms implemented during the year, the bottomline slid by 79.83 percent year-on-year to clock in at Rs.13.26 million in 2020. The NP margin nosedived to 0.54 percent in 2020 while EPS was recorded at Rs.2.17. 2021 proved to be even worse. Although topline posted 12 percent year-on-year uptick to clock in at Rs.2737.55 million, it couldn’t trickle down, resulting in net loss. ZIL hadn’t posted net loss after 2015. The sales growth in 2021 was the result of revision in product pricing, discount adjustments, improved sales mix and launch of a new hygiene and protection soap bar during the year. Due to COVID-19, the customer-base of ZIL was switching to hygiene soap brands as ZIL brands were mostly in the beauty category. So, the decision to launch hygiene soap was the need of time. The company also re-launched its hand-wash brand during the year. These decisions enabled ZIL to attain a reasonable growth in its topline, however, the towering prices of palm oil products which are the main raw materials for soap manufacturing coupled with high fuel, power and energy cost and packing material charges took its toll on the gross profit which shrank by 52.27 percent year-on-year in 2021 with GP margin drastically falling down to 10.45 percent. Distribution and administrative expense slumped by 0.37 percent and 2.71 percent respectively in 2021. The main reason was lower freight charges, lower salaries expense as well as lower legal and professional charges incurred during the year. ZIL also cut down its workforce from 170 employees in 2020 to 143 employees in 2021. Other income continued to grow on the back of amortization of government grant. No provisioning done for WWF and WPPF and no impairment loss booked on operating assets also squeezed other expense by 46.52 percent in 2021. The company posted operating loss of Rs. 232.09 million in 2021. During the year, the debt-to-equity ratio of ZIL further magnified to 136 percent as the company secured both short-term and long-term financing which drove up its finance cost by 54.18 percent in 2021. The company posted net loss of Rs.291.59 million in 2021 with loss per share of Rs.47.63. In 2022, the company appeared to have risen above from the hard times. The topline posted a stunning 48.38 percent year-on-year growth to clock in at Rs.4061.84 million. The topline growth was the result of both volumetric sales and increased pricing during the year. This coupled with decline in global commodity prices particularly palm oil products enabled the company to attain GP margin of 18.40 percent in 2022. Gross profit posted a significant growth of 161.13 percent during the year. Distribution expense inched up by 1.67 percent in 2022 due to higher freight charges, travelling and conveyance charges, advertisement expense and payroll expense incurred during the year. The impact was partially offset by lower research and development expense incurred during the year. Administrative expense mounted by 34.59 percent in 2022 due to higher payroll expense which was the impact of inflationary pressure as the company further trimmed down its workforce to 128 employees in 2022. Other expense was magnified by 377.45 percent in 2022 due to exchange loss on revaluation of financial liabilities incurred during the year coupled with provisioning done for WWF and WPPF. However, this was partially offset by 24.73 percent higher other income recorded during the year which was the consequence of robust dividend income recognized during the year. The company posted operating profit worth Rs.150.70 in 2022. OP margin stood at 3.71 percent in 2022. Finance cost grew massively by 217 percent in 2022 on the back of multiple upward revisions in discount rate during the year coupled with extended credit facility availed during the year. The debt-to-equity ratio showed no respite and clocked in at 169 percent in 2022. The company registered net profit of Rs.23.38 million in 2022 with EPS of Rs. 3.82 and NP margin of 0.58 percent. In 2023, ZIL posted a staggering 39.7 percent year-on-year growth in its topline which clocked in at Rs.5674.32 million. This was the result of price optimization, improvement in sales mix, expansion of distribution network and introduction of appropriate SKUs to grab greater share of the market. Cost of sales mounted by 22.64 percent in 2023. The growth in cost was considerably lower than the topline growth recorded in 2023 due to stability in the prices of palm oil and strength shown by Pak Rupee during the last quarter of CY23. ZIL was able to record 115.34 percent growth in its gross profit with GP margin climbing up to 28.36 percent. Distribution expense mounted by 93.47 percent in 2023 due to strengthening of sales team and superior promotional and marketing activities organized during the year. Administrative expense also surged by 71.4 percent in 2023 primarily due to higher payroll expense. This was the result of inflationary pressure as well as expansion in workforce which stood at 159 employees in 2023 versus 128 in the previous year. Higher dividend income on short-term investments resulted in 52.83 percent growth in other income in 2023. However, its impact was nullified by 124.68 percent taller other expense incurred during the year. This was due to higher provisioning done for WPPF, one-off plant shifting and dismantling cost incurred during the year as well as exchange loss incurred on the revaluation of financial liabilities. Operating profit rose by 222.21 percent in 2023 with OP margin jumping up to its highest level of 8.56 percent. Finance cost multiplied by 71.28 percent in 2023 due to higher discount rate and increased working capital requirements. ZIL recorded 960.80 percent enhancement in its net profit which stood at Rs.247.97 million in 2023 with EPS of Rs.40.5 and NP margin of 4.37 percent – the highest during the period under consideration. In 2024, ZIL posted 12.17 percent year-on-year growth in its topline which clocked in at Rs.6364.85 million. This was on account of growth in sales volume coupled with better sales mix. Price rationalization to attain competitiveness and higher market penetration resulted in a dip in GP margin which stood at 27.67 percent in 2024. In absolute terms, gross profit ticked up by 9.43 percent in 2024. ZIL invested in its sales force to expand its distribution network particularly in the retail sector in 2024. This coupled with investment in brand building activities and improving customer service resulted in 58.98 percent higher distribution expense in 2024. Administrative expense also registered 13.86 percent spike in 2024 due to higher payroll expense on account of inflationary pressure. ZIL recorded 56.51 percent thinner operating profit in 2024 with OP margin clocking in at 3.32 percent. Finance cost slid by 14.28 percent in 2024 due to monetary easing. This was despite higher short-term financing obtained during the year. ZIL’s net profit tumbled by 82.68 percent to clock in at Rs.42.947 million in 2024. EPS also dropped to 7.01 in 2025 while NP margin descended to 0.67 percent. Recent Performance (2025) ZIL’s net sales ticked up by 7.55 percent to clock in at Rs.6845.13 million in 2025. This was on the back of improved sales volume, price optimization and diversification of sales mix. During the year, the company launched “Hype by Capri” body spray, Capri Deo lotion and anti-bacterial soap “Hypro” – all very well received by the market. This coupled with cost optimization resulted in 26.42 percent stronger gross profit in 2025. GP margin also ticked up to 32.53 percent. Distribution expense surged by 30.61 percent in 2025 due to sales force expansion, increase in promotional activities particularly targeted to increase the market penetration of its newly launched products, as well as increased freight charges incurred during the year. Administrative expense escalated by 13.38 percent in 2025 particularly on the back of elevated payroll expense as the company expanded its workforce to 165 employees in 2025 from 161 employees in the previous year. Other expense spiked by 420.86 percent in 2025 due to expenses related to investment property. Other expense was conveniently offset by 265 percent stronger other income recognized during the year which was the consequence of greater gain recognized on the sale of fixed assets and rental income recorded during the year. During the year, the company reclassified its freehold land as an investment property. The property was previously classified as held-for-sale but it couldn’t be sold due to operational difficulties. The company also entered into a rental arrangement with its associated company, Supreme Consumer Products (Private) Limited against its leasehold property and related building. As a result, the property was reclassified from leasehold property to investment property. For the first time during the period under consideration, ZIL also booked allowance for ECL to the tune of Rs.69.95 million in 2025. All these factors resulted in 3.44 percent dip in operating profit in 2025 with OP margin dipping to 2.98 percent. Finance cost tapered off by 25.76 percent in 2025 due to monetary easing. Net profit strengthened by 17.10 percent to clock in at Rs.50.29 million in 2025. This translated into EPS of Rs.8.21 and NP margin of 0.73 percent in 2025. Future Outlook The UAE based acquirer may instill more growth into the company by opening the doors of opportunities for the company in the export markets especially in the GCC market where the acquirer has its core expertise. The company will continue to optimize its sales force, sales mix and price competitiveness to stay viable and attain greater share in both local and export markets.

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