Lahore, July 17, 2023 (PPI-OT): Steelex (Pvt.) Limited (“Steelex” or “The Company”) has been operating in the piping industry for almost four decades. The Company is principally engaged in the manufacturing and sale of MS and GI pipes and has expanded its product base with time. The Company operates two manufacturing units which are located in Karachi and includes latest equipment for the manufacturing. The Company has the capability to produce the M.S. and Galvanized Pipes in compliance with BSS and equivalent international standards. The Plastic unit offers a comprehensive range of UPVC and CPVC pipes and fitting to cater the growing need of the water, sewerage, building construction industry.
The Company has been successfully exporting their Steel products to Singapore, Sri Lanka, UAE, Iraq, Oman, Afghanistan, Trinidad and African Countries. Locally, the Company has decent presence in the South region with a steady growth in revenues. Approximately 50-55% of the local revenues are generated from the sale of PVC pipes and fittings while the remaining is contributed by the sale of steel pipes. In continuation to the prevailing economic conditions of the Country, the industrial growth is expected to remain slow. As a result, volumes sold by the Company might experience a dip. However, stability in prices of products are expected to compensate the dip in volumes to a larger degree. Going forward, any dip in prices may affect the volumes adversely.
The Company’s reliance on working capital financing has increased as a result of rising costs and import restrictions. With rising interest rates, the Company’s bottom line is expected to be adversely impacted by the finance cost owing to increased borrowings. Assessment of financial risk profile incorporates management projected growth in revenues based on volumetric increase, adequate debt service coverage with moderate leveraging with no long-term borrowings on its balance sheet.
The ratings assigned to Steelex take into account the moderate business risk profile of allied steel products sector given its fragmented nature accompanied by prevailing competition and price sensitivity of raw material to exchange rate. Steelex is a family owned and operated company. The company is led by an experienced management team but formal governance and organization structure needs improvement. Delays in finalization of annual audited accounts remains a concern reflecting below satisfactory financial discipline of the Company. Sustainable demand, customer stickiness and a credit policy are imperatives. Improving management, governance and control environment are also very important.
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