The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Upgrades the Ratings of Etihad Alloys (Pvt.) Limited

Rating Type Entity
(02-Nov-22 )
(16-Nov-21 )
Action Upgrade Initial
Long Term BBB- BB+
Short Term A3 A3
Outlook Developing Developing
Rating Watch - -

Etihad Group is setting up a steel industrial unit in Rahim Yar Khan adjacent to its existing Sugar Mill – Etihad Alloys (Pvt.) Limited (EAPL). The unit will have steel melting capacity of 250,000 MT per annum. Primarily, EAPL will be engaged in manufacturing of Steel Billets. The Project is being financed through a mix of debt and equity in the ratio of 80:20. As per the management of EAPL, overall progress of the project is ~62% as of end August-2022.Significant procurement of its Plant and Machinery has been done and the installation work is in progress. Initially, company planned to achieve Commercial Operation Date (COD) by Oct-22. However, due to the lockdown in China owing to resurging of COVID-19, import of EAPL’s Plant took approximately six months more time which in turn pushed farther its COD from October 2022 to March 2023. Moreover, due to the delay in COD and continuous devaluation of Pak Rupee against US Dollar, company faced cost overruns to the tune of PKR 1,000 million. However, EAPL has successfully managed to bridge this gap with equal contribution of equity and debt. Technical Associates Pakistan (Pvt.) Ltd is the Civil Contractor of the company. They have vast and proven track record in construction related services. The Company will be maintaining DSRA account providing coverage for three months on its financial obligations till maturity. The company has already executed the PPA with Etihad Power Generation Limited to meet its energy requirements.
The improvement in assigned ratings takes into account the significant work completed towards the construction of complex, though the developing outlook depicts the construction risk. Adding to that, ratings also take comfort from group association and strong sponsors profiles which includes Sugar Mill, Real Estate and Construction Businesses. However, Ratings are dependent on the management's ability to successfully achieve its completion benchmarks and to improve its financial risk profile.

About the Entity
EAPL, a venture of Etihad Group, is private Limited company incorporated in 2021 under the companies Act 2017. Etihad group is one of the progressive industrial houses in Pakistan having different businesses like Sugar Mill, Construction Services and Real Estate. The industrial unit of EAPL will have the melting capacity of 250,000 MT per annum. Mr. Zahid Jamil is the chairman of the board and also the CEO of the company. He has vast experience of heading multiple entities in different industries. Diversified skill set and experience of multiple years is reflected in the members’ profiles too and it will contribute strongly while establishing the presence of the company in the market.

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.