Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Bilal Steel Mills (Pvt.) Limited
Rating Type | Entity | |
Current (26-Apr-19 ) |
Previous (31-Dec-18 ) |
|
Action | Maintain | Maintain |
Long Term | BB | BB |
Short Term | B | B |
Outlook | Stable | Stable |
Rating Watch | - | - |
Bilal Steel is a distinct player in the steel industry. The company directly caters to the demand of corporate/ mega projects; multiple projects to its credit in the past. The ratings reflect small market presence of the company in a large fragmented industry. The Company operates on adequate business margins in order to compete in local market. Going forward, margins are likely to get impacted given greater competition in steel industry. Many steel players are undergoing capacity expansion and utilization of expanded capacity in current scenario of muted demand will be a challenging factor. Bilal Steel is expanding its melting capacity; project fully financed through equity. The Company's profitability is commensurate to its size. The Company holds an adequate financial risk profile; absence of long term financing. The debt on balance sheet pertains to short term borrowings. Going forward, cash flows needs to stay in line with working capital requirements of the company. The brain of the company is Mr. Farrukh Shahzad Malik; also reflecting key man risk. Bilal Steel is a private limited company with two member board – hence improvement in board oversight is desired.
The ratings are dependent upon the company’s ability to sustain and improve its market presence, business volumes and margins. Enhancement of business profile with improvement in financial risk indicators is crucial. Moreover, strengthening of governance framework and human resource is vital.
About
the Entity
Bilal Steel Mills (Private) Limited (Bilal Steel), is a private limited company incorporated in 2013, it is primarily engaged in manufacturing and sale of billet steel and D-formed steel bars. The company operates through its registered head office located in Lahore. The plant is located on Sheikhupura Road with installed capacity of 87,500 tonnes of re-rolling and 42,000 tonnes of furance. The entire shareholding of the company is owned by Malik Family.
The overall control of the Company vests in two member board of directors of the sponsoring family. Mr. Farrukh Shahzad Malik, the founder of the company is the key man behind the business. He is the CEO and Chairman of the company, whereas his son, Mr. Bilal Malik is the Managing Director. The company employs an able team of professionals.