Lahore, January 25, 2023 (PPI-OT):Mughal is a known name in the steel industry. The Company has a diversified product slate as its operating both in ferrous and non-ferrous segments. Furthermore, the establishment of strong brands like ‘Mughal Supreme’ gives a competitive edge to the Company. The reported profitability for June 22 showed significant growth from previous years primarily due to an increase in sales prices as volumes in the ferrous segment declined slightly. Margins witnessed a slight decline as the impact of an increase in raw material prices and other input costs were not completely transferred into sale prices.

The overall debt of the company has been witnessing an increasing trend on account of ongoing expansions and supplementary cushion for the short comings of working capital, due to which short-term borrowing contributed a significant portion to the total debt. While the Company is also planning to finance its short-term working capital needs through the issuance of unsecured commercial papers.

Furthermore, Mughal Iron and Steel Industries Limited – PP Sukuk – PKR 5bln was intended to be issued during FY22. But, considering the stressed economic conditions the instrument is yet to be issued and expected to be issued soon. However, comfort for assigned rating drawn from a strong equity base of PKR 20.8 billion driven by healthy profits.

The ratings are dependent upon the company’s ability to sustain its healthy business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remains important. Moreover, upholding of governance framework is vital.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com