The Pakistan Credit Rating Agency Limited
Press Release


Uswa Sikandar

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 maintains rating of Mughal Iron & Steel Industries Limited | PPCP | PKR 2 bln | Apr-23

Rating Type Debt Instrument
(06-Nov-23 )
(22-May-23 )
Action Maintain Initial
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Mughal is a known name in the steel industry. The Company’s business profile has sustained and improving, over the last few years. Governance framework is strengthened by presence of independent oversight on board. The Company has a diversified product slate as its operating both in ferrous & non-ferrous segments. The ferrous segment comprises Billets, Rebars & Girders while the non-ferrous segment comprises Copper ingots mainly. The highlighted achievement through geographical diversification in the revenue stream led to a significant contribution from exports of Copper Ingots & granules to China (i-e; ~24% of revenue contribution) which not only contributed to the top line but also brought sustained profit stream, going forward. The company’s top line was recorded at PKR 21.032 billion in 1QFY24 as per management accounts (FY23: PKR 67.390 billion) despite significant decrease in volumes as well as slight erosion in gross margins as the impact of increase in raw material prices and other input costs was not completely transferred to sale prices. Net margins also exhibited a downward trend due to high finance cost . Company’s leveraging ratio was reported at ~ 51.5% in Sep 23. Apart from banking facilities, the company is also relying on a few privately placed issued instruments to fuel increase in its WC requirements.
The ratings are dependent upon the Company’s ability to sustain its healthy business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remains important. Moreover, upholding of governance framework is vital.

About the Entity
Mughal Iron & Steel Industries Limited (Mughal), is a public limited company incorporated in 2010 and is primarily engaged in the manufacturing and sale of billets, girders, and rebars. The Company has expanded its product base, by entering the non-ferrous segment. Mughal operates with a melting capacity of 500,000M.T., rerolling capacity of 630,000M.T., and non-ferrous recycling capacity of 90,000M.T.. Currently, a nine-member BoD is monitoring the overall functioning under the chairmanship of Mr. Mirza Javed Iqbal. Mr. Khurram Javaid is the execution lead as CEO and the driving force behind the Company.

About the Instrument
Mughal Iron & Steel Industries Limited issued a Rated, Unsecured, Privately Placed Short Term Conventional Commercial Paper (CP) of PKR 2,000mln at face value to finance the company’s working capital requirements. The tenor of ICP is 9 months and carrying a profit rate of 6MK+150bps. Profit payment and principal would be made in a bullet payment at the time of maturity

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.