PACRA Maintains Entity Ratings of Amreli Steels Limited

The ratings reflect Amreli Steels' healthy business profile on account of the company’s market positioning in the industry. The company is currently working on a expansion project which would result in capacity enhancement to 600,000tpa from 400,000tpa of billets by Feb-19. Amreli has already achieved 605,000tpa of re-rolling capacity in Apr-18 and average 400,000tpa billets capacity in Aug-17. During the first quarter of FY19, the board of directors has approved the second phase of expansion of rolling capacity from 605,000tpa to 1,105,000tpa subject to the approval of technical feasibility and successful financial close. Capacity additions by competitors is likely to heat up competition, herein, effective and timely management of capacity expansion remains important for Amreli. The company has stepped up efforts to ensure supportive supply chain to utilize enhanced capacities in a timely manner. Meanwhile, regulatory protection to the finished product (rebar) is an added advantage for the sector. The company’s changes to organizational structure are likely to bring enhanced efficiency. The business profile of the company remained healthy on the back of enhanced capacity, improved business volumes. However, margins declined, an industry wide phenomenon, primarily driven by increased international scrap prices. The leveraging might increase in medium term in pursuit of expansion. The ratings draw comfort from strong business acumen of Amreli Steels' sponsors - Akberali Family.


The ratings are dependent on the management's ability to sustain its business profile while benefiting from positive demand fundamentals. Utilization of enhanced capacity and upholding business margins is vital. Moreover, prudent management of financial affairs remains important.

About the Entity
Amreli Steels Limited, incorporated in 1984, obtained listing on Pakistan Stock Exchange on Dec 1st, 2015. The company is majority owned by Akberali family (~75%), followed by financial institutions (~18%) and general public (~7%). Sponsoring family carries over six decades of experience in steel and allied business. Amreli Steels operates a re-rolling mill (capacity: 605,000tpa) and a billet manufacturing plant (capacity: 400,000tpa).

Amreli Steels has a seven-member board of directors; four are from the sponsoring family while three are independent members. Mr. Abbas Akberali - the founding member - holds the position of Chairman, whereas his son, Mr. Shayan Akberali is the CEO of the company. The management team carries extensive relevant experience and has a long association with the company.