PACRA Maintains Entity Ratings of Malik MIJ Chunxing Resources Recycling Company Limited

Malik MIJ Chunxing Resources Recycling Company Limited (MMC or the Company) is a prominent player in Pakistan’s lead smelting and recycling sector. The Company specializes in recycling Used Lead Acid Batteries (ULAB) and refining lead bullion. With a focus on environmentally sustainable practices, MMC provides comprehensive solutions for the efficient utilization of ULAB across Pakistan and aims to produce 99.994% refined Green Lead. The Company’s total production capacity stands at 50,000 tons per annum, covering both smelting and refining operations. MMC benefits from a strong ownership structure and operates as a strategic joint venture among established global players. The shareholding includes Jiangsu Chunxing Resources Recycling Company, one of China’s largest lead recyclers with more than four decades of experience in secondary lead production and recycling, and MIJ International, a UAE-based global metals trading group. In addition, local industry participants with significant market experience contribute to the Company’s strategic positioning. This partnership provides MMC access to advanced recycling technologies and an established international customer base. Pakistan’s lead recycling industry remains fragmented, with a large unorganized smelting sector creating competitive pressure. Demand for recycled lead is closely linked with developments in the automotive sector and the need for energy backup solutions. During FY25, lead acid battery production volumes declined on a year-on-year basis, primarily due to reduced demand for backup power solutions amid improved energy availability. However, this was partially offset by steady demand from the automobile segment and the replacement market. Export demand for refined lead also remained relatively subdued in light of global economic conditions and evolving consumption patterns. MMC maintains a presence in both local and export markets and benefits from its association with MIJ International, which supports international sales and provides quality assurance for refined lead meeting the 99.994% purity benchmark. During FY25, the Company’s revenue declined by ~26% and stood at PKR 18.6 billion. The reduction in revenue was primarily driven by a ~25% decline in refined lead sales volumes. The contribution of exports to total sales remained stable and stood at around 35.5%. Despite the contraction in volumes, margins remained largely stable across all levels. Going forward, MMC plans to expand its production capacity over the next three years. The Company has also diversified its product portfolio by introducing Calcium Alloy and Antimony Alloy, which are key materials used in battery terminals and maintenance-free batteries. MMC’s board primarily performs an advisory function and comprises members with relevant industry experience and technical expertise. The Company maintains an adequate financial risk profile supported by comfortable coverage indicators and stable cash flow generation. The working capital cycle remains stretched, mainly due to higher trade receivables and payables. The capital structure remains leveraged, with short-term borrowings primarily utilized to support working capital requirements.
The ratings depend on upholding sustainable growth in topline, while retaining sufficient profits, cash flows, and coverages. The company needs to enhance its governance framework and the efficacy of its financial transparency. Furthermore, adherence to maintaining its debt metrics at an adequate level with an efficient working capital cycle, especially a reduction in trade receivables, is a prerequisite.

About the Entity
MMC is an unlisted public company. It is a J.V between Chunxing RRC (45.817% shareholding), MIJ (18.67%), and Mr. Babar Waheed Malik, CEO and board chairman, holds 17.75%. Mr. Saeed Rafiq holds 17.75%. The MMC board consists of four non-executives and one executive director.