Amreli Steels Limited ("Amreli" or "the Company"), a public limited company incorporated in 1984 under the Companies Ordinance, is primarily engaged in manufacturing and sale of high-quality reinforcement bars (rebars) and billets. The Company obtained listing on Pakistan Stock Exchange on December 1st, 2015 and is traded under the section of Engineering.

The Company operates two advanced re-rolling plants, one located in S.I.T.E. Karachi and the other in Dhabeji. These plants utilize the latest hot re-rolling technologies in the industry, with a nameplate capacity of 180,000 metric tons and 425,000 metric tons of rebars per annum, respectively. Additionally, the melt shop, located in the industrial zone at Dhabeji, Port Qasim, spans 65 acres of land and has a nameplate capacity of 600,000 metric tons per annum.

The Company is engaged in the manufacturing and sale of two key products: i) steel billets, ii) rebars including a) Grade 60 Deformed Steel bars and b) Xtreme bars (G-500W). The Company has the largest billet manufacturing plant in Pakistan with a capacity of producing 600,000 tons. The Company’s majority power need is being fulfilled by K-Electric.

The Company is primarily owned by the Akberali family, holding a majority stake of approximately 75%. The remaining ownership is distributed among the general public, banks, mutual funds, and other financial institutions.

The sponsors, who hold a substantial stake in the Company, play a key role in maintaining the stability and continuity of its ownership structure. However, in light of the current challenges the Company is facing, the sponsors are actively considering the potential inclusion of strategic partners.

The Akberali family brings over six decades of experience in managing the steel and allied industries. However, operating the business over the past few years, amidst unprecedented challenges in the industry, has disrupted the Company's alignment. This period has underscored a resistance to adapting to the rapidly evolving industry landscape, revealing areas where the Company must adjust to remain competitive and resilient in the face of ongoing changes.

Amreli is the flagship entity of the sponsors, who have previously demonstrated their commitment to the Company by injecting funds when needed. However, despite the Company's current distressed situation, the sponsors' support has yet to materialize during these challenging times, raising concerns about their involvement in stabilizing the business in the face of ongoing difficulties.

The overall control of the company is vested in a seven-member board of directors, with four members from the sponsoring family, including the Chairman and CEO, and three independent members. Mr. Abbas Akberali serves as the Chairman, while his son, Mr. Shayan Akberali, holds the position of Chief Executive Officer. Mr. Abbas Akberali’s extensive experience, spanning over four decades in the steel industry, adds significant value to the board. The separation of the Chairman and CEO roles further enhances the company’s governance structure. Additionally, Ms.Mariam Akberali holds a non-executive role on the board. The inclusion of three independent members further strengthens the governance framework, ensuring a balanced and effective oversight mechanism.

Mr. Abbas Akberali chairs the board and brings unparalleled experience, with a background in metallurgical engineering and an MBA from Columbia University. He has played a key role in driving reforms to grow Pakistan’s steel industry and is a founding member of the Hunar Foundation, serving on the boards of several notable non-profits. Mr. Shayan Akberali, who joined Amreli Steels in 2002, has been instrumental in the Company's growth over the past two decades. As CEO of Pakistan’s largest rebar producer, he focuses on operational excellence and HR development, building a strong leadership team to drive the company's expansion and success across the nation.

The Company has established two board committees: (i) the Audit Committee and (ii) the Human Resource & Remuneration Committee. The Audit Committee is composed of three independent members and one non-executive director. Overall, attendance at board meetings is consistently strong, reflecting the commitment and active participation of board members in the governance process.

M/s BDO Ebrahim & Co., Chartered Accountants, with a QCR rating, serve as the external auditors of the Company. They issued an unqualified opinion on the financial statements for the year ended June 30, 2024. However, in their review report for the period ending December 2024, they emphasized concerns regarding the Company’s financial position. The Company has consistently incurred losses, with accumulated losses standing at PKR 3.4 billion as at end March 2025, and its current liabilities exceeding current assets. These factors raise significant doubt about the Company's ability to continue as a going concern.

Amreli Steels revamped its reporting structure in FY17, introducing new positions aligned with best practices of the Code of Corporate Governance to further define and streamline the reporting lines. The multi-tier structure includes two senior positions: i) COO-Strategy, ii) COO-Operations, and the Chief Financial Officer. Six functions report to the COO-Strategy: i) Marketing, ii) Government and Public Relations, iii) Information Technology, iv) Corporate Affairs & Liaison, v) New Businesses, and vi) CSR and Communication. The remaining eight functions report to the COO-Operations and Chief Financial Officer: i) Sales, ii) Finance, iii) Supply Chain, iv) Administration & IR, v) Plant Operations, vi) Human Resources, vii) Security and Vigilance, and viii) Environmental Health & Safety.

Mr. Shayan Akberali, the eldest son of Mr. Abbas Akberali, serves as the CEO. An engineer by profession, Mr. Shayan has been with the Company for over two decades and has played a key role in its growth. Mr. Hadi Akberali, the younger son, holds the position of COO – Strategy, bringing valuable strategic insight to the Company. Mr. Fazal Ahmed serves as COO – Operations, overseeing day-to-day operational management. Additionally, Mr. Taha Umer - Chief Financial Officer, contributing his expertise to the Company's financial leadership. The overall management team is regarded as strong, with a deep understanding of the industry and a well-rounded skill set, positioning the Company for continued success and growth.

Amreli has established five management committees that focus on reviewing critical performance areas of the Company. These committees oversee a range of key operational aspects, including daily production analysis, yield analysis, mechanical or production breakdowns, and downtime analysis. By regularly monitoring these factors, the committees ensure optimal performance and efficiency across the Company’s operations.

Amreli has implemented SAP as its ERP solution, incorporating the following operational modules: i) Production Planning, ii) Material Management, iii) Sales and Distribution, iv) Finance, v) Controlling, and vi) Human Capital Management, which includes the Success Factors module. Reports are generated on a daily basis to support efficient decision-making and operational monitoring.

The Company has established strong internal control systems and procedures to maintain the quality of its products consistently. In addition to external quality audits conducted by independent consultants, the Companyoperates an in-house computerized testing laboratory for product inspection. The Company is certified with ISO 9001 by Lloyd’s Register Quality Assurance, ensuring that its manufacturing processes and procedures align withinternational standards. To enhance customer service, the Company has set up a dedicated sales office to manage and address customer inquiries related to its products. Furthermore, Amreli Steels is committed to maintaining a safe and environmentally responsible workplace by adhering to OHSAS 18001 and ISO 14001.

In FY24, overall local steel production totaled approximately 8.4 million metric tons (MT), reflecting a year-on-year (YoY) decrease of around 5.6%. Production of Billets and Ingots (Long Steel) declined by about 7.5% YoY, reaching approximately 4.9 million MT, while Coil & Plates (Flat Steel) production amounted to around 3.5 million MT, down by approximately 2.7% YoY. Steel imports surged to around 2.9 million MT in FY24, marking a YoY increase of approximately 31.8%, following the lifting of import restrictions on steel products and scrap in June 2023, which had been imposed due to economic imbalances in FY23. Consequently, the overall local supply of steel products in FY24 reached about 11.3 million MT, up by approximately 1.8% from 11.1 million MT in FY23. This increase in supply was driven by the rise in finished steel imports, which indicates higher demand and a reduction in local steel production.

Amreli Steels is a prominent player in Pakistan’s steel industry, particularly in the southern region. It stands out as the only steel company in the country with sales offices located in Sukkur, Hyderabad, Multan, Lahore, Islamabad, and Karachi, along with warehouses in Karachi, Lahore, and Islamabad, strategically positioned to bypass city traffic in Baluchistan. The Company has built a strong distribution network, currently working with 186 retailers, ensuring broad accessibility and market reach across the region.

In the 9MFY25, the Company experienced a significant decline in its topline, which dropped by approximately 61%, reaching PKR 12.9 billion compared to PKR 33.4 billion in the corresponding period of the previous year (FY24: PKR 38.78 billion). This decline was primarily driven by a reduction in volumetric sales, influenced by a combination of challenging factors. These factors led to a substantial increase in debt obligations and a high interest cost. As a result, the Company reported a net loss of PKR 2.9 billion, reflecting a drop in capacity utilization.

Low-capacity utilization also led to unabsorbed fixed costs, escalating production expenses and causing a sharp contraction in gross margins to 2.6% in 9MFY25, down from 10% in corresponding period (FY24: 6.2%). Operating margins also turned negative, dropping to -5.1%, compared to positive 5.1% in the same period last year (FY24: 1.1%). This decline in operating performance was further exacerbated by a significant rise in financial charges, leading to a notable deterioration in net margins, which fell to -22.1%, compared to -3.9% in 9MFY24 (FY24: -15.7%).

The Company's ability to sustain itself in the current industry environment is facing significant challenges due to ongoing financial pressures and substantial debt obligations. To ensure its future viability, a fundamental transformation in strategy is necessary. Without bold and decisive action, coupled with a clear and implementable plan, the Company will continue to face considerable obstacles. In this regard, the Company is actively engaging with various financial institutions to restructure its debt. A successful and timely completion of this restructuring process is vital and would play a crucial role in securing the Company’s long-term sustainability.

In the first nine months of FY25, the Company's operations were temporarily halted due to constraints in working capital. The management is actively engaged in discussions with banks and exploring alternative solutions to resume operations. Additionally, the board has made the decision to temporarily suspend activities at the Karachi-based manufacturing facility, as part of efforts to manage the current financial challenges.

In 9MFY25, the Company’s Free Cash Flow from Operations (FCFO) turned negative, amounting to PKR -157 million, a significant decline from PKR 2,143 million in the same period of the previous year (FY24: PKR 604 million). This downturn was primarily due to the loss incurred during the period, coupled with a sharp increase in finance costs. As a result, the Company's interest coverage ratio (FCFO/Finance Cost) deteriorated to -0.1x by March 2025, compared to a positive 0.2x in March 2024 (June 2024: 0.1x).

As of March 2025, the Company’s leverage stood at approximately 66%, with total debt amounting to PKR 22.324 billion, slightly lower than PKR 22.374 billion recorded in June 2024 (with leverage at June 2024: ~61%).Notably, around 82% of the total debt is attributed to short-term borrowings.