PACRA Maintains Entity Ratings of Platinum Steel Mill (Pvt.) Limited

Platinum Steel Mill (Pvt.) Limited ("PSML" or "the Company") is a Karachi based steel manufacturer with a fully integrated production process, producing high quality billets and deformed steel rebar that cater primarily to the southern Karachi market. Although the Company operates on a relatively smaller scale compared to major industry players, it has demonstrated resilience and maintained a clear strategic focus in an environment marked by volatility and challenges within the steel sector. The assigned ratings reflect the inherent risks associated with Pakistan’s long steel industry, including cyclical demand patterns, fluctuations in exchange rates, volatility in international steel prices, and competition from larger and more established producers. During FY25, overall demand in the steel market remained subdued, leading to a decline in PSML’s revenue to PKR 1,384 million, down from PKR 2,390 million in FY24. Despite the reduction in top-line sales, gross margins improved significantly to 10.3% compared to 6.9% in the previous year, while net margins remained stable at 0.6%, supported by a combination of operational efficiencies and strategic sales initiatives. PSML manufactures both standard steel products and items specifically tailored to meet individual customer requirements, offering flexibility to accommodate project specific needs and technical specifications. The Company has capitalized on supply disruptions faced by customers sourcing from northern suppliers by commanding premium prices and ensuring timely deliveries. Furthermore, through product diversification, PSML has recently introduced 72-grade rebars, which meet the same strength requirements as conventional bars while requiring approximately 5% fewer units, making them more cost-effective and attractive to customers, thereby supporting higher-margin sales and additional high-value orders. On expansion front the second furnace, commissioned in July 2024, is fully operational and has enhanced production efficiency, although overall industry demand remained muted, limiting volumetric growth. PSML’s equity base remained stable at PKR 3,288 million (FY24: PKR 3,249 million), with all capacity expansions funded entirely through equity, and short-term borrowings employed only to support working capital needs. The Company benefits from backward integration in scrap sourcing, which helps control input costs, as well as its strategic location at Port Qasim, providing logistical advantages and facilitating timely delivery to customers. Management continues to focus on strengthening distribution channels, expanding market reach, and improving the responsiveness of sales operations to capture untapped opportunities across Karachi.
The ratings remain contingent on PSML’s ability to sustain and gradually grow its market position, further enhance the efficiency and reach of its distribution network, and leverage operational and strategic initiatives to secure new market opportunities. Gradual improvement in governance practices, alongside the guidance of experienced, family led management and continued prudent financial management, will also be critical in ensuring the Company’s long-term stability, resilience, and competitiveness in a challenging and cyclical industry.

About the Entity
Platinum Steel Mill (Private) Limited, incorporated in 2019 and operational since 2021, is a Karachi-based steel manufacturer engaged in the production of billets and deformed bars. The Company has an installed melt capacity of 100,000 tons and a rolling capacity of 175,000 tons per annum. It is majority owned and led by Mr. Faisal Baghpati, who holds 99% shareholding, with the remaining 1% held by Ms. Mehreen Faisal. The Company primarily serves the southern Karachi region, catering to both retail and construction segments under the brands Armourmax, Thundermax, and Ultramax.