Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
30-Oct-26 BBB A2 Stable Maintain -
30-Oct-25 BBB A2 Stable Maintain -
15-Nov-24 BBB A2 Stable Maintain -
16-Nov-23 BBB A2 Stable Upgrade -
22-Nov-22 BBB- A2 Stable Initial -
About the Entity

Platinum Steel Mill (Private) Limited, incorporated in 2019 and operational since 2021, is a Karachi-based steel manufacturer engaged in the production of billets and deformed bars. The Company has an installed melt capacity of 100,000 tons and a rolling capacity of 175,000 tons per annum. It is majority owned and led by Mr. Faisal Baghpati, who holds 99% shareholding, with the remaining 1% held by Ms. Mehreen Faisal. The Company primarily serves the southern Karachi region, catering to both retail and construction segments under the brands Armourmax, Thundermax, and Ultramax.

Rating Rationale

Platinum Steel Mill (Pvt.) Limited (“PSML” or “the Company”) is a Karachi based steel manufacturer with a fully integrated production process, producing high quality billets and deformed steel rebar that cater primarily to the southern Karachi market. Although the Company operates on a relatively smaller scale compared to major industry players, it has demonstrated resilience and maintained a clear strategic focus in an environment marked by volatility and challenges within the steel sector. The assigned ratings reflect the inherent risks associated with Pakistan’s long steel industry, including cyclical demand patterns, reliance on imported scrap, elevated energy costs, and competition from larger and more established producers. The industry gained momentum in FY26 after several difficult years, as the builder community in Karachi and the wider south returned to launching new projects and booking activity picked up noticeably. Sentiment in the property market was lifted by the removal of the tax on additional properties and by a more accommodating approach towards commercial construction, while infrastructure works, and steady retail offtake added to steel consumption. A stable currency and steady interest rates provided further comfort to the sector. However, the conflict in the Middle East created new difficulties, particularly for scrap supply. With the UAE route no longer dependable, mills had to turn to European suppliers, where longer voyages and container transfers at intermediate ports pushed delivery timelines out considerably, and rising demand for European scrap added to its cost. Against this backdrop, PSML grew its revenue by 39% to PKR 1,920 million in FY26 from PKR 1,384 million a year earlier, with sales volumes of around 8,300 MT, as the Company benefited from its established presence in Karachi and the recovery in local demand. The change in sourcing meant PSML had to hold larger scrap inventories and commit more funds to procurement, while higher freight and input costs could only be partly recovered from customers, keeping margins under some pressure. To meet these working capital needs and support higher production, the Company enhanced its funded and non-funded lines with its banking partners, which also positions it to scale up further as the sector improves. PSML continues to operate without significant long-term borrowings, with growth supported by sponsor funding and retained profits, leaving its leverage modest.

Key Rating Drivers

Going forward, the ratings remain contingent on PSML’s ability to convert the revival in Karachi’s construction activity into sustained growth in sales volumes. Efficient utilization of its existing furnaces, along with the timely commissioning of the planned third furnace, will be important in improving cost absorption and operating performance. The audited financials for FY26, which are still in process, will be closely reviewed to validate the Company’s financial position. Equally important will be the Company’s ability to navigate the ongoing geopolitical situation, particularly the reliability and cost of its scrap supply, and to recover rising input costs from customers. The Company’s continued prudent management of leverage as it draws on its enhanced credit lines will also be critical to maintaining stability and competitiveness in a cyclical industry.

Profile
Legal Structure

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.


Background

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.


Operations

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 has installed two melting furnaces, each with an annual capacity of 50,000 tpa, of which one is currently operational in line with prevailing demand conditions. Installation of a third furnace is planned to achieve optimal utilization of the Company’s 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.


Ownership
Ownership Structure

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.


Stability

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.


Business Acumen

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.


Financial Strength

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.


Governance
Board Structure

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.


Members’ Profile

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.


Board Effectiveness

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.


Financial Transparency

BDO Ebrahim & Co., Chartered Accountants, serve as the external auditors of the Company. They issued an unqualified opinion on the review report for FY25, 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 FY26 is currently in process.


Management
Organizational Structure

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.


Management Team

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.


Effectiveness

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.


MIS

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.


Control Environment

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.


Business Risk
Industry Dynamics

During FY26, Pakistan's long steel (rebar) sector continued to operate in a medium-to-high business risk environment, shaped by cyclicality, imported scrap reliance, and elevated energy costs. The Federal government's PSDP allocation for FY26 was raised to ~PKR 4.2 trillion (FY25: ~PKR 3.68 trillion), up ~15% YoY, and the FY26 budget also eased customs duties on key inputs — additional customs duty on steel scrap was cut from 2% to 0% and on melting scrap from 3% to 0%, while duty on semi-finished products such as billets was halved from 11% to 5% — improving cost competitiveness for local re-rollers. Reconstruction needs following the Jul–Sep 2025 floods across Punjab and Sindh, together with a government mark-up subsidy for construction and housing-sector tax incentives, are expected to support rebar demand, though the extent of translation into higher volumes remains contingent on the pace of public-sector project execution. On the monetary front, after an extended easing cycle through FY25 and 1HFY26 that had brought the policy rate down to 10.5%, the State Bank of Pakistan raised the policy rate by 100bps to 11.5% in April 2026 amid a spike in global oil prices linked to Middle East tensions, and has held it at that level through July 2026 — reversing part of the earlier relief to financing costs and keeping leverage-sensitive sector margins under continued pressure. Overall, sector profitability is expected to improve gradually, contingent on sustained demand recovery and a stable interest rate environment.


Relative Position

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.


Revenues

In FY26, PSML recorded revenues of PKR 1,920 million, up 39% from PKR 1,384 million in FY25, reversing the decline seen in the previous year. The increase was primarily driven by higher units sold, with annual sales of approximately 8,300 MT. Demand improved in the company’s core Karachi and southern markets, where builders resumed project launches after a subdued 2023-24 period. Sentiment in the real estate sector benefited from the withdrawal of the tax on additional properties (Section 7E) and the easing of restrictions on commercial construction in the city. Steel consumption was further supported by ongoing infrastructure and military projects, while retail demand remained steady. Macroeconomic stability, with a steady exchange rate and stable interest rates, also supported business activity.


Margins

In FY26, PSML’s profitability remained broadly stable in line with the industry, with a slight pickup in demand and higher sales volumes supporting the absorption of fixed costs. However, the Middle East tensions in the latter half of the year weighed on margins, as higher shipping costs and the shift in scrap sourcing away from the UAE added to input costs. These increases could not be fully passed on through selling prices. Audit for FY26 is yet to be finalized.


Sustainability

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.


Financial Risk
Working capital

The Company uses short-term borrowings to fund its day-to-day operations, mainly the purchase of scrap. These are supported by funded and non-funded facilities from Habib Metropolitan Bank, UBL and Bank Alfalah. Amid geopolitical tensions in the Middle East, which disrupted the UAE route, the company shifted its scrap sourcing towards Europe. The longer distance and transshipment at intermediate ports have stretched lead times considerably, requiring the company to carry higher raw material stock and keep more funds tied up in procurement. To support this and the higher business volumes, the company increased its funded and non-funded lines during the year.


Coverages

Coverage indicators remain decent, as the Company has no significant long-term debt obligations. Historically, expansion has been primarily funded through sponsor loans, while balance sheet exposure largely comprises working capital borrowings. Accordingly, the absence of significant long-term debt servicing requirements supports the Company’s capacity to meet its financial obligations.


Capitalization

The company has no long-term debt, and its funding is limited to short-term borrowings for working capital and the unsecured, interest-free subordinated loan from directors. With profits increasing in FY26, the equity base has grown through retained earnings, keeping leverage low and the capital structure conservative. Leverage is likely to increase as the enhanced bank lines are utilized to support higher production.


 
 

Oct-26

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Oct-26

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