PACRA Maintains Entity Ratings of Jamal Pipe Industries (Pvt.) Limited

Jamal Pipes Industries (Pvt.) Limited (“The Company or JPI”), a family operated business, is engaged in manufacturing of pipes and allied products for four decades. The Company's product slate includes black line pipes, galvanized line pipes, variety of poles (octaconical poles, tubular poles and street light poles and guardrails. Around 24% is contribution from poles while remaining 76% arises from pipes and guardrails including a small portion of G.I pipes. Diversification in product slate is considered positive while further strengthening of revenue from each product would reduce concentration and add cushion to business risk profile. The ratings take into account the high business risk profile of the steel pipes and tubes industry, which is particularly sensitive to economic cyclicality, fluctuations in exchange rates, and international steel prices. The industry also contends with challenges such as low-capacity utilization owing to lower demand due to slowdown in economy, higher financing costs, rupee depreciation, and rising energy costs. The Company in line with the industry trend faced a volumetric decline though, order book remains in comfortable position, as it enjoys a long association from big corporate clients. During the period 6MFY24, JPI sales revenue clocked to PKR ~1,596mln (FY23: PKR ~2,507mln). The gross profit and net profit for the period 6MFY24 stood at 9.9% – PKR ~158mln & 3.6% – PKR ~58mln (FY23: 10.3% – PKR ~258mln & 3.1% – PKR ~78mln) respectively. Owing to ease of import restrictions JPI starts to import the raw material which previously was purchased locally at a higher cost. JPI manages its working capital through the mix of internal cash generation and short-term borrowings. As of 6MFY24 leveraging stood at 29.7% (FY23: 10.3%) constituting 100% short term borrowings - inherent need of the business model. Sufficient cushion in working capital lines are available.
The ratings reflect an adequate market presence of JPI in a highly fragmented industry. The Company has an explicit policy of not raising any long-term debt, therefore, the debt book only contains of short-term borrowings.

About the Entity
Jamal Pipes Industries (Pvt.) Limited was incorporated in 1981. The Company is wholly owned by the sponsors family with equal shareholding held by Mian brothers – Mr. Mian Farooq Ahmed and Mr. Mian Shakeel Ahmed. The overall control of Company vests with two members' board of directors. Mr. Farooq Ahmed - the Chief Executive and Mr. Shakeel Ahmed - Executive Director are equipped with necessary technical skills to manage and oversee the business. Mr. Zubair Ahmed – (CA finalist) is the CFO of the Company and hold long association with the Company.