Karachi, Platinum Steel Mill (Pvt.) Limited (PSMPL), a state-of-the-art steel manufacturing entity established in 2019 in Port Qasim's industrial sector, has received an upgraded entity rating from The Pakistan Credit Rating Agency Limited (PACRA). This upgrade reflects the company's impressive growth, innovative manufacturing technologies, and strategic expansion plans.
According to The Pakistan Credit Rating Agency Limited, PSMPL, despite its relatively small size, has demonstrated strong potential for growth. In its first full year of operation (FY 23), the company achieved a revenue of PKR 3.118 billion, maintaining gross profit margins comparable to similar-sized industry players. With an equity base of PKR 1.224 billion, PSMPL is currently expanding its production capabilities, including the installation of a second furnace that will increase its melting capacity to 100,000 tons per annum. Notably, this capital expenditure (CAPEX) is entirely funded by the company’s sponsors, indicating a strategy to avoid long-term borrowing and maintain a comfortable leverage level.
PSMPL has primarily used internally generated cash for its working capital needs. However, with ongoing expansion, there may be an increased reliance on short-term borrowings. The company's management is focused on maintaining an optimal capital structure while expanding its market reach and improving distribution channels.
The rating upgrade by PACRA is attributed to PSMPL’s robust growth in revenue, phased expansion strategy, and the unwavering support from its sponsors. The company’s diversification into other business areas and the substantial net worth of its sponsors also contribute positively to its ratings. Furthermore, the backward supply chain integration enhances PSMPL’s business efficacy.
The upgraded rating hinges on PSMPL’s ability to increase market share through volume growth and geographical diversification. Effective management of financial risk indicators is considered crucial. As a family-owned and operated business, PSMPL faces challenges related to governance and exposure to risks of common management and ownership. The overall governance framework requires improvement, although the company benefits from experienced leadership.
About the Entity: Platinum Steel Mill (Private) Limited was incorporated in Pakistan on July 15, 2019, and is wholly owned by the Baghpati family. The company operates with a current melting capacity of 50,000 M.T. and rerolling capacity of 175,000 M.T., with plans to increase the melting capacity to 150,000 M.T. The board, including Chairman/CEO Mr. Faisal Baghpati, is controlled by members of the sponsoring family, leveraging his 15 years of business experience.
Source: The Pakistan Credit Rating Agency Limited (PACRA)