Platinum Steel Mill (Private) Limited (“the Company” or “PSML”) is a private limited entity incorporated in Pakistan on July 15, 2019, under the Companies Act, 2017. The Company’s registered office is located at C-49, K.D.A Scheme No. 1, Main Karsaz Road, Gulshan Town, Karachi, Pakistan. PSML commenced its commercial operations in June 2021.

Platinum Steel Mill (Private) Limited (“PSML”) is a modern steel manufacturing company established to carry out the core operations of steel melting and rolling. The Company commenced its commercial production in June 2021 with an installed melting capacity of 50,000 tons per annum and a rolling capacity of 175,000 tons per annum. PSML operates using Pakistan’s first European technology-based induction furnace and a direct rolling mill, reflecting its focus on advanced technology and efficient production processes.

PSML’s manufacturing operations comprise a melt shop and a rolling mill, with a combined nameplate capacity of 150,000 tons per annum (tpa) and 175,000 tpa, respectively. The Company currently operates two melting furnaces, each with an annual capacity of 50,000 tpa, while installation of a third furnace is planned to achieve optimal utilization of its designed capacity. PSML’s product portfolio includes steel billets and high-quality deformed rebars in Grade 60 and Grade 72, marketed under the brand names Armourmax, Thundermax, and Ultramax. All manufacturing activities are carried out under an ISO 9001:2015 certified quality management system, ensuring consistency, strength, and compliance with national and international standards.

Platinum Steel Mill (Private) Limited (“PSML”) is a closely held private company, entirely owned by the Baghpati family, with Mr. Faisal Baghpati holding 99% of the shares and Ms. Mehreen Faisal, his spouse, holding the remaining 1%. This concentrated family ownership ensures strong control, quick decision-making, and long-term commitment to the business. However, it also entails a degree of key man risk and highlights the need for a structured succession plan to ensure continuity in leadership over the long term.

The Baghpati family has maintained a consistent presence and ownership across their business ventures over the years, reflecting a high degree of continuity and reliability. Their long-standing involvement, financial strength, and diversified experience underscore their stability and resilience as owners.

The principal sponsor, Mr. Faisal Baghpati, possesses over 15 years of experience in the steel and related industries, which has been instrumental in steering the Company’s operations. His understanding of the sector, coupled with a hands-on management approach, has contributed to the Company’s operational progress and stability since inception.

The Baghpati family possesses considerable financial capability, supported by their ownership and management of diversified ventures such as Kopak Paints and leased shipping operations. Their involvement across multiple sectors provides them with significant liquidity and flexibility, enabling effective resource allocation and financial management. This broad-based portfolio and demonstrated financial discipline underpin the sponsors’ robust financial strength.

The overall control of the board vests in a two-member board of directors, both of whom belong to the sponsoring family, including the Chairman/CEO. Mr. Faisal Baghpati holds the positions of Chairman and Chief Executive Officer, ensuring centralized leadership and strategic oversight.

The board members bring relevant experience and expertise. Mr. Faisal Baghpati has considerable experience in the steel industry, which supports timely and efficient decision-making. He also serves as a director on the Kopak Paints board, while Ms. Mehreen Faisal acts as Commercial Advisor at Kopak Paints, reflecting the family’s active engagement across business ventures.

As a private company, PSML meets the regulatory requirement by appointing two directors. While the board is functional, its effectiveness could be further enhanced through the inclusion of independent directors and the establishment of formal board committees to strengthen governance practices.

BDO Ebrahim & Co., Chartered Accountants, serve as the external auditors of the Company. They issued an unqualified opinion on the review report for FY24, reflecting sound financial reporting. BDO Ebrahim & Co. is an ‘A’ category auditor on the SBP list and holds a QCR rating, underscoring the credibility of the audit function. The audit for FY25 is currently in process.

PSML operates with a streamlined and efficient organizational structure, headed by the Chief Executive Officer (CEO). The CEO directly oversees key functional heads, including the Head of Sales, Chief Operating Officer (COO), Head of Supply Chain, and Chief Financial Officer (CFO), ensuring cohesive management and seamless operational oversight.

Mr. Faisal Baghpati, the CEO, has been associated with PSML since its inception, providing strategic vision and leadership. Supporting him is a competent management tier, including Mr. Farrukh Mehmood as CFO, Mr. Huzaifa as GM Sales, and Mr. Rehan Khalique (ME) as COO since November. The team brings extensive technical expertise and operational acumen, ensuring efficient execution of business objectives.

PSML comprises six core functions: Marketing, Accounts, Production, Information Technology, Sales, and Quality Control. Each unit is managed by experienced personnel, many of whom have been associated with the Company since its early days, ensuring consistency, operational discipline, and high performance across all business areas.

The Company has deployed SAP Business One (SAP B1), a comprehensive Enterprise Resource Planning (ERP) solution, to integrate and manage critical business processes including accounting, finance, inventory, sales, warehousing, customer relations, reporting, and analytics. This system enhances operational transparency, facilitates real-time data-driven decision-making, and supports profitable growth through streamlined workflows and actionable insights.

PSML has instituted a robust control environment to maintain operational excellence and product quality. The Quality Control Department monitors plant operations, ensuring machinery functionality, operational efficiency, and minimal material wastage. These measures collectively uphold high production standards and optimize resource utilization.

During FY25, total local steel production in Pakistan declined to approximately 7.2 million metric tons (mln MT), reflecting a 14.3% YoY decrease. Production of Billets and Ingots (Long Steel) fell sharply by 22.4% YoY to 3.8 mln MT, while Coils & Plates (Flat Steel) decreased modestly by 2.9% YoY to 3.4 mln MT, primarily due to weaker domestic demand in the construction and industrial sectors. The lower demand led to reduced production, which in turn caused overall local steel supply to fall to 10.4 mln MT, a 7.9% decline from FY24. To meet market requirements and take advantage of comparatively lower prices, imports of finished steel products increased to 3.2 mln MT (10.3% YoY). Meanwhile, steel scrap imports rose slightly to 2.8 mln MT, valued at USD 1,271 million, as industry players replenished inventories amid constrained local production.

Platinum Steel Mill (PSML) has established a solid presence in the southern steel market, with a strong foothold in karachi. The Company is actively working to strengthen its market position by expanding its reach across the entire Karachi region. This targeted geographic expansion, combined with its focus on operational efficiency and capacity growth, is expected to enhance PSML’s market share and competitiveness among regional steel producers.

In FY25, PSML recorded revenues of PKR 1,384 million, down from PKR 2,390 million in FY24, reflecting a notable decline. This reduction was primarily driven by lower units sold, amid continued demand pressures in the market. Despite the commissioning of the second furnace in July 2024, which enhanced production capacity, the company was unable to fully offset the impact of subdued market demand. The expanded capacity, however, provides a foundation for potential sales growth in the upcoming periods.

In FY25, PSML improved its profitability metrics despite a decline in overall revenue. The gross profit margin increased to 10.3% from 6.9% in FY24, reflecting better operational efficiency and cost management. Operating margins slightly decreased to 1.8% compared to 2% in FY24, while the net profit margin stood at 0.6%, same as in FY24. This indicates that even amid lower sales, the company has been able to enhance efficiency and maintain relatively stable profitability.

To support its growth ambitions, PSML is enhancing its distribution channels to better capture market demand. Currently, the Company operates through three main channels: retail sales, contracts with construction builders, and government supply. By optimizing these channels and extending coverage to new areas, PSML aims to improve market penetration, ensure timely delivery, and capitalize on emerging business opportunities, thereby creating a more resilient and sustainable operational model.

In FY25, Platinum Steel’s working capital requirements increased significantly, with the net cash cycle extending to 203 days, up from 77 days in FY24, primarily due to higher closing stock of billets and finished goods. To manage day-to-day operations, the company has started utilizing short-term borrowings of approximately PKR 122 million, against an available short-term borrowing capacity of PKR 250 million. This marks a shift from previous years when working capital was largely funded through internally generated cash, reflecting the company’s evolving funding strategy to support higher inventory levels and operational needs.

EBITDA for FY25 stood at PKR 221 million, slightly below FY24 levels of PKR 224 million, while free cash flows from operations (FCFO) improved to PKR 162 million from PKR 68 million in FY24, indicating better cash management. The coverage ratio declined to 0.3x in FY25 from 0.5x in FY24, reflecting limited capacity to cover financial obligations in the absence of long-term financing, despite strong operational cash flows.

The company’s leverage increased to 4.8% in FY25 from 0.9% in FY24, driven by a lease liability of PKR 31 million and a subordinate loan from directors of PKR 2,044 million. The subordinate loan remains unsecured, interest-free, and repayable on demand. Overall, the company’s capital structure remains conservative, with manageable debt levels and reliance on short-term borrowings to support operational and working capital requirements.