Karachi, VIS Credit Rating Company Limited has downgraded the entity and short-term ratings of Agha Steel Industries Limited (ASIL) to 'BB-/B-3' from its previous position, indicating a negative outlook for the steel producer’s financial health.

According to VIS Credit Rating Company Limited, the downgrade reflects the speculative nature of ASIL's investments and concerns about liquidity, which could affect timely obligation payments. This decision follows an operational halt at the end of December 2023 due to an accident, with production only partially resumed by mid-January 2024. ASIL, established in 2013 and public since 2015, operates primarily in the production and sale of steel bars, wire rods, and billets from its Karachi-based facility.

The rating downgrade is attributed to operational interruptions and reduced production capacity impacting ASIL's financial profile and debt servicing capabilities. Management has been actively engaging with lenders to restructure debt and facilitate full operational recovery, aiming to stabilize financial and production activities.

Future ratings by VIS will hinge on the success of the restructuring process and the company's ability to overcome financial shortfalls, with a close watch on sponsor support and debt servicing abilities over the coming period.