PACRA Maintains the 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, reliance on imported scrap, elevated energy costs, and competition from larger and more established producers. The industry gained momentum in FY26 after several difficult years, as the builder community in Karachi and the wider south returned to launching new projects and booking activity picked up noticeably. Sentiment in the property market was lifted by the removal of the tax on additional properties and by a more accommodating approach towards commercial construction, while infrastructure works, and steady retail offtake added to steel consumption. A stable currency and steady interest rates provided further comfort to the sector. However, the conflict in the Middle East created new difficulties, particularly for scrap supply. With the UAE route no longer dependable, mills had to turn to European suppliers, where longer voyages and container transfers at intermediate ports pushed delivery timelines out considerably, and rising demand for European scrap added to its cost. Against this backdrop, PSML grew its revenue by 39% to PKR 1,920 million in FY26 from PKR 1,384 million a year earlier, with sales volumes of around 8,300 MT, as the Company benefited from its established presence in Karachi and the recovery in local demand. The change in sourcing meant PSML had to hold larger scrap inventories and commit more funds to procurement, while higher freight and input costs could only be partly recovered from customers, keeping margins under some pressure. To meet these working capital needs and support higher production, the Company enhanced its funded and non-funded lines with its banking partners, which also positions it to scale up further as the sector improves. PSML continues to operate without significant long-term borrowings, with growth supported by sponsor funding and retained profits, leaving its leverage modest.
Going forward, the ratings remain contingent on PSML’s ability to convert the revival in Karachi’s construction activity into sustained growth in sales volumes. Efficient utilization of its existing furnaces, along with the timely commissioning of the planned third furnace, will be important in improving cost absorption and operating performance. The audited financials for FY26, which are still in process, will be closely reviewed to validate the Company’s financial position. Equally important will be the Company’s ability to navigate the ongoing geopolitical situation, particularly the reliability and cost of its scrap supply, and to recover rising input costs from customers. The Company’s continued prudent management of leverage as it draws on its enhanced credit lines will also be critical to maintaining stability and competitiveness in a 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.