Karachi: The Pakistan Credit Rating Agency (PACRA) has maintained the entity rating of Siddiqsons Tinplate Limited (STPL), despite a tumultuous fiscal year marked by declining revenues and operational hurdles. The rating is underpinned by the ongoing financial and operational backing from its sponsor, Siddiqsons Limited, which has been crucial in navigating market and operational volatilities.

STPL faced a challenging year in FY2024-25, with revenues dropping by approximately 50% to PKR 2,023 million, down from PKR 4,076 million in the previous fiscal year. This decline resulted in a net loss of PKR 255 million, compared to a loss of PKR 2,058 million in FY24. The company's equity dwindled to PKR 907 million as of June 2025, reflecting a constrained capital base.

Several factors contributed to the company's financial performance. The continued availability of sales tax exemptions in the FATA/PATA regions, the substitution of tin plates with Galvalume in food packaging, and low-priced imports of secondary tin plates adversely affected demand and capacity utilization. In response, the company's management pursued legal and regulatory actions, including filings with the National Tariff Commission, to protect its market position.

Efforts to revitalize the business included a strategic focus on managing exports to the U.S. market and boosting local sales. However, these initiatives have so far yielded limited results. Additionally, the company's CRC project encountered significant delays due to supplier issues, culminating in an unfavorable international arbitration award and a mediation provision of Rs. 820.97 million.

Despite these challenges, the sponsor remains optimistic, hoping successful mediation will secure the company's sustainability and future prospects. The company continues to meet its debt obligations with support from its parent company, a factor essential for maintaining its credit rating.

PACRA's rating is contingent upon the sponsor's commitment to provide financial assistance in the event of cash flow shortfalls, especially amid ongoing operational pressures and subdued market demand. The company's low-leverage capital structure, while limiting financial flexibility, increases its reliance on external debt for project investments.