PACRA Upgrades Entity Ratings of Etihad Alloys (Pvt.) Limited.

Etihad Alloys (Pvt.) Limited (“EAPL” or “the Company”) is part of the diversified bouquet of entities under the Etihad Group. The ratings reflect the strong profile of the Group and the significant progress made towards completing EAPL’s integrated steel complex, which has now entered its final pre-commercial phase. The Steel and Power Projects were financed through syndicated facilities of PKR 11,735mln, with sponsor equity injected as per the timeline agreed with the lenders, and all debt obligations to date have been serviced ahead of operations through sponsor support, including fifteen quarterly instalments on the Steel Project and two quarterly instalments on the Power Project.
Commissioning activities are in their final stage at both the Steel and Power Projects, with the Commercial Operations Date (COD) now targeted for end-October 2026. The revised timeline stems from extended inspections of late-arriving imported turbine components; as the melting furnaces rely on captive power, the Steel Project’s COD has been aligned with that of the Power Project. Management plans to commence melting operations with one of three furnaces to validate product quality, establish operating routines and train the workforce before scaling up in a shorter period, a prudent approach that moderates ramp-up risk. The Steel Re-Rolling Project, which will move the Company downstream from merchant billets into higher-value rebar, is also near completion, with COD targeted for early December 2026. Letters of credit for scrap procurement have been established, and initial consignments have been received at site.
The integrated configuration underpins EAPL's competitive positioning. The captive power plant will run on bagasse sourced from the adjacent group's own sugar mill, insulating the melting operation from grid tariffs, historically the largest swing factor in sector margins, while the Group's experience in operating bagasse-based cogeneration is directly transferable. In-house billet production feeding the Re-Rolling Mill will lengthen the value chain captured and reduce reliance on merchant billet sales, and the central Punjab location provides access to both northern and southern markets. The Special Economic Zone status confers a tax holiday in accordance with applicable laws, strengthening post-COD cash flows and supporting faster debt amortisation. As at FY26, total borrowings stood at PKR 9,407mln, which are expected to increase with the remaining drawdowns. The Company will, however, enter a sector where profitability has recovered but import competition remains intense under ongoing tariff rationalisation.
The upgrade reflects the narrowing of execution risk as the Steel and Power Projects approach commissioning, with financing and raw material arrangements largely in place, and an uninterrupted debt servicing record backed by sponsor support. The developing outlook reflects the pending achievement of COD of the integrated complex, followed by revenue generation and the servicing of debt from the Company's own operations. Until operating cash flows stabilise, continued sponsor support remains critical to the Company's financial risk profile.

About the Entity
EAPL, a venture of Etihad Group, is a private limited company incorporated in 2021 under the Companies Act, 2017, and situated in District Rahim Yar Khan, Punjab. The Company is setting up an integrated complex comprising a Steel Melting Plant (~250,000 MT per annum), a 37.2 MW bagasse-based captive Power Plant and a Re-Rolling Mill (200,000 MT per annum). Etihad Group is one of Pakistan's leading industrial houses, with diversified operations in sugar manufacturing, construction services, real estate, hospitality and now entering into steel sector. The CEO, Mr. Zahid Jamil, is the man at the last mile and brings vast experience leading various entities across multiple sectors. The CEO, Mr. Zahid Jamil, is the man at the last mile and brings vast experience leading various entities across multiple sectors.