Karachi: Amreli Steels Limited (ASTL) conveyed an optimistic outlook during a recent corporate briefing hosted by Topline Securities, detailing strategic initiatives aimed at boosting its financial performance and market position. Key highlights included anticipated growth in long steel demand and a comprehensive restructuring plan designed to improve liquidity and operational efficiency.
Management at ASTL projected a 5% to 7% increase in long steel demand by FY26, with expectations for growth to accelerate to 10% to 12% in subsequent years. The completion of a Master Restructuring Agreement (MRA) with stakeholders marks a significant milestone for ASTL, deferring principal and mark-up payments for three years, and converting approximately Rs11 billion of short-term debt into long-term facilities with a grace period.
The restructuring plan’s fixed mark-up, pegged to KIBOR without additional spread, is anticipated to reduce financial losses. ASTL’s strategy to regain market share includes ensuring material availability, rationalizing prices, and targeting 60% to 65% of sales in the commercial sector. The company aims to achieve utilization levels of 40% to 50%, deemed necessary for profitability.
Despite a 59% sales decline in FY25, attributed to financial restructuring and limited working capital lines, ASTL maintained higher rebar prices than competitors, citing strong brand loyalty. The company’s focus on the retail market during FY25 was highlighted as a key strategy.
Further strengthening of working capital is expected from a Rs4 billion injection through sponsor equity and the sale of non-core assets. These measures, coupled with restructuring benefits, are projected to ease liquidity pressures and turn cash flows positive. Early debt repayment remains a priority, contingent on cash flow availability.
A notable decrease in scrap prices to US$409 per ton in FY25 and a reduction in electricity tariffs to Rs34.6 per kWh were reported. However, these benefits were largely offset by fixed local charges and low capacity utilization.
ASTL's other income saw a significant increase in FY25, reaching Rs593 million, up from Rs3 million in the previous year, largely due to gains from property sales and profit on debt. The company also anticipates benefiting from an approved electricity package, expecting higher production than the base year.