PACRA Maintains Entity Ratings of Mughal Iron & Steel Industries Limited.

Mughal is a known name in the steel industry. The Company’s business profile has sustained and improving, over the last few years. Governance framework is strengthened by presence of independent oversight on board. The Company has a diversified product slate as its operating both in ferrous & non-ferrous segments. The ferrous segment comprises Billets, Rebars & Girders while the non-ferrous segment comprises Copper ingots mainly. Furthermore, the establishment of strong inbound logistics and supply chain network and investment in alternate sources of energy gives a competitive edge to the Company. The ratings incorporate the essence of material advancement that Mughal has achieved in terms of further diversity in revenue streams. The highlighted achievement through geographical diversification in the revenue stream led to a significant contribution from exports of Copper Ingots & granules to China (i-e; ~24% of revenue contribution) which not only contributed to the top line but also brought sustained profit stream, going forward. Mughal has attained a formidable market share by establishing the brand and earning trust with regard to quality as well as continuously expanding and upgrading its ferrous and non-ferrous plants, the most recent being non-ferrous automation plant which came online in June 23. The company’s top line recorded at PKR 67.390 billion in FY23 reported growth of ~2% (YoY) despite significant decrease in volumes as well as slight erosion in gross margins as the impact of increase in raw material prices and other input costs was not completely transferred to sale prices. Net margins also exhibited a downward trend due to high finance cost . Company’s leveraging ratio was reported at ~ 51% in June 23. Apart from banking facilities, the company has also issued a few privately placed instruments to fuel increase in its WC requirements.
The ratings are dependent upon the company’s ability to sustain its healthy business profile amidst strong competition and exposure to overall economic slowdown and inflation, herein, effective and prudent management of financial risk indicators remain important. Moreover, upholding of governance framework is vital.

About the Entity
Mughal Iron & Steel Industries Limited (Mughal), is a public limited company incorporated in 2010, is primarily engaged in the manufacturing and sale of billets, girders, and rebars. The Company has also expanded its product base in recent years, by entering in non-ferrous segment. Mughal operates with a melting capacity of 500,000M.T., rerolling capacity of 630,000M.T., and non-ferrous recycling capacity of 90,000M.T. Currently, a nine-member BoD is monitoring the overall functioning under the chairmanship of Mr. Mirza Javed Iqbal. Mr. Khurram Javaid is on the execution lead as CEO and the driving force behind the Company. Other senior tier management is associated with the company for a fairly long period of time. Diversified skill set and experience of multiple years reflected from member's profile, contribute to strong foot printing of the Company in the market.