The Pakistan Credit Rating Agency Limited
Press Release


Anam Waqas Ghayour

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings to Steelex (Pvt.) Limited

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

Steelex (Pvt.) Limited (“Steelex” or “The Company”) has been operating in the piping industry for almost four decades, principally engages in the manufacturing and sale of MS & GI pipes and has expanded its product base with time. The Company operates two manufacturing units which are located in Karachi and includes latest equipment for the manufacturing. The Company has the capability to produce the M.S. & Galvanized Pipes in compliance with BSS and equivalent international standards. The Plastic unit offers a comprehensive range of UPVC and CPVC pipes and fitting to cater the growing need of the water, sewerage, building construction industry. With rising demand in the construction industry, the company has plans on increasing its production capacity in the future with the addition of new variety of products to the Steelex family. This would allow the company to increase its market presence in other regions of the country. The Company has been successfully exporting their Steel products to Singapore, Sri Lanka, UAE, Iraq, Oman, Afghanistan, Trinidad and African Countries. Locally, the company has decent presence in the South region with a steady growth in revenues. Approximately 50-55% of the local revenues are generated from the sale of PVC pipes and fittings while the remaining is contributed by the sale of steel pipes. The company has limited reliance on borrowings to support its working capital needs. Assessment of financial risk profile incorporates management projected growth in revenues based on volumetric increase, adequate debt service coverage with moderate leveraging with no long-term borrowings on its balance sheet.
The ratings assigned to Steelex take into account the moderate business risk profile of allied steel products sector given its fragmented nature accompanied by prevailing competition and price sensitivity of raw material to exchange rate. Steelex is a family owned and operated company. The company is led by an experienced management team but formal governance and organization structure needs improvement. Financial transparency needs improvement. Sustainable demand, financial transparency, customer stickiness and a credit policy are imperatives. Improving management, governance and control environment are also very important.

About the Entity
Steelex is a modest production house for manufacturing high frequency induction welded M.S (Mild Steel) and G.I (Galvanized Iron) pipes. It has also ventured into production of PVC (Poly Vinyl Chloride) piping system, with the addition of UPVC and CPVC pipes and fittings. The company provides highest quality piping solution in compliance with international standards for all industrial, commercial and residential requirements. The company was formed by Chaudhry Muhammad Sabir (Late) in 1985 and is now operated by his three sons Mr Zahid Ali, Mr. Shehzad Sabir and Mr. Kashif Sabir who are also present on the board along with their mother Ms. Kausar Jabeen. They are accompanied by a team of senior officials who have been associated with the company since a long time.

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.