The Pakistan Credit Rating Agency Limited
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Uswa Sikandar

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PACRA Assigns Initial Entity Ratings to Platinum Steel Mill Pvt. Limited

Rating Type Entity
(22-Nov-22 )
Action Initial
Long Term BBB-
Short Term A2
Outlook Stable
Rating Watch -

Established in 2019 in the industrial sector of Port Qasim, Platinum Steel Mill Private Limited (PSMPL) is a state of the art vertically integrated steel mill that incorporates the latest innovative technologies in manufacturing, efficiency and sustainability. Although the size is small, it is good to grow from. The Company produces high quality deformed steel rebar's and vertical integration of the steel plant gives it a competitive edge. PSMPL started its operations in June 2021 and posted topline of PKR 1,452mln in 2022. Projections shared by the management show that revenues may witness heightened growth in FY23 due to low base effect and more in upcoming years through enhancement of melting capacity and development of sales and marketing network. On account of expansion, company may witness an increase in reliance on borrowings to manage its working capital requirements post expansion. Maintaining optimal mix of capital structure is thus very important. Group’s diversification into other businesses is considered positive and ratings take comfort from the net worth of sponsors. Ratings also incorporate the essence of business’s backward supply chain integration. PSMPL is a family owned and operated business exposing it to risks of same management and ownership. The overall governance framework is at very initial stages and needs improvement. Company is led by capable management. Business remains vulnerable to oscillations in macro-economic financial indicators.
The ratings are dependent upon the company’s ability to enhance its market share through volumetric growth as well as geographical diversification, effective and prudent management of financial risk indicators remains vital. Moreover, improvement of control environment, management and governance framework is imperative.

About the Entity
Platinum Steel Mill (Private) Limited ("the Company") is a private limited company incorporated in Pakistan on 15 July 2019 under the Companies Act, 2017. The registered office of the Company is situated at C-49, K.D.A Scheme No.1, Main Karsaz Road. Gulshan Town, Karachi, Pakistan. The company operates with a melting capacity of 50,000M.T. and rerolling capacity of 175,000M.T., a further capacity enhancement plan is underway to increase the melting capacity to 150,000M.T. The Company is wholly (100%) owned by Baghpati family. The overall control of board vests in two members, both of whom are from sponsoring family including the Chairman/CEO. Mr. Faisal Baghpati holds the position of the Chairman, as well as the office of Chief Executive Officer. His presence adds significant value to the board on account of his business experience, spanning over last 15 years.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.