Steelex (Pvt.) Limited

CREDIT RATING REPORT | Jul-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
11-Jul-25 BBB A2 Stable Maintain -
12-Jul-24 BBB A2 Stable Upgrade -
14-Jul-23 BBB- A2 Stable Maintain -
14-Jul-22 BBB- A2 Stable Initial -
About the Entity

Steelex (Pvt.) Limited is a mid-sized manufacturing company offering high-quality steel and allied products in line with international standards for industrial, commercial, and residential applications. Established in 1985 by the late Chaudhry Muhammad Sabir, Steelex is now managed by his three sons—Mr. Zahid Ali, Mr. Shehzad Sabir, and Mr. Kashif Sabir—who serve on the board alongside their mother, Ms. Kausar Jabeen. The leadership is supported by a team of seasoned professionals who have been long associated with the Company.

Rating Rationale

Steelex (Pvt.) Limited (“Steelex” or “the Company”) has been a key player in the piping industry for nearly four decades. The Company specializes in manufacturing and selling Mild Steel (MS) and Galvanized Iron (GI) pipes, produced in line with international quality standards. Over the years, Steelex has diversified its product range to include a comprehensive line of UPVC and CPVC pipes and fittings through its plastic division, catering to the water supply, sewerage, and building construction sectors. Operations are carried out through two manufacturing facilities located in Karachi, both equipped with state-of-the-art machinery and technology. The Company’s primary market remains the southern region of the Country, where it enjoys a strong foothold supported by consistent revenue growth. In addition, it has established a small but steady presence in export markets, supplying steel products to countries such as Singapore, Sri Lanka, the UAE, Iraq, Oman, Afghanistan, Trinidad, and several African nations. During FY24 and 6MFY25, capacity utilization remained strong, reflecting the Company’s stable operational performance. The steel segment, contributing approximately 56.6% of net revenues, continued to anchor the business by sustaining production volumes and serving as the primary driver of profitability due to its higher margin profile. Meanwhile, the PVC division has shown notable growth over the past year, with increased output and improved sales traction. This has added positively to the topline, reflecting growing demand in the water supply and construction sectors. However, despite this growth, the PVC segment’s contribution to overall margins remains relatively modest. Steelex maintains prudent financial management with minimal reliance on long-term debt. Working capital needs, driven by production volumes, are efficiently managed through a combination of internal cash flow and short-term bank financing. The financial risk profile is sound, with sufficient cash flows to cover interest obligations and moderate leverage. Moreover, the ratings also derive comfort from Steelex’s consistent growth trajectory and its ability to maintain a stable market position despite Pakistan’s challenging macroeconomic environment.

Key Rating Drivers

The ratings assigned to Steelex factor in the moderate business risk profile of the allied steel products sector, characterized by fragmentation, intense competition, and raw material price sensitivity linked to exchange rate fluctuations. As a family-owned and operated business, Steelex benefits from experienced sponsors whose continued support has been instrumental in navigating industry challenges; however, there is a need to enhance formal governance structures and organizational processes. Going forward, sustaining demand, maintaining customer loyalty, and implementing a sound credit policy will be critical. Strengthening management practices, governance, and the overall control environment remains a key area for improvement.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Steelex (Pvt.) Limited

rating analysis

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Profile
Legal Structure

Steelex (Pvt) Limited is a private company incorporated on 2 September 1985 under Companies Act, 2017. The principal activity of the company is the manufacturing and sale of PVC and Steel Pipes. The registered office of the company is situated at B-30 (A) Estate Avenue, S.I.T.E, Karachi.


Background

The company was formed by Ch. Mohammad Sabir (Late) as a modest production house for manufacturing high frequency induction welded M.S (Mild Steel) and G.I (Galvanized Iron) pipes. With improving performance and customers trust Steelex has now ventured into production of PVC (Poly Vinyl Chloride) piping system, with the addition of UPVC and CPVC pipes and fittings to the Steelex family. The company provides highest standard piping solution for all industrial, commercial and residential requirements.


Operations

Currently Steelex operates two manufacturing units. Steel Unit is located in D-67 (F), PHASE 1 S.I.T.E. SUPER HIGHWAY, KARACHI that includes latest equipment for the manufacturing of MS & GI Pipes. Steelex has the capability to produce the M.S. & Galvanized Pipes in compliance with BSS and equivalent International standards. They have been successfully exported their products to Singapore, Sri Lanka, Trinidad, UAE, Iraq, Oman, Afghanistan and African Countries. The Plastic unit is located in B-30 (A), ESTATE AVENUE, S.I.T.E., KARACHI and offers a comprehensive range of PVC, UPVC and CPVC pipes and fitting to cater the growing need of the water, sewerage, building construction industry.


Ownership
Ownership Structure

Entire ownership belongs to the sponsoring family including Ch Muhammad Sabir's (Late) wife and three sons.


Stability

The ownership of the company is stable with the company belonging to the same sponsoring family.


Business Acumen

The business acumen of the sponsors is considered adequate with vast experience in the steel sector.


Financial Strength

The financial strength of the sponsoring family is considered adequate with sizeable equity deployed in the business.


Governance
Board Structure

The board consists of four members, each of them is from the sponsoring family. All of the members on the board are associated with the company from 2004.


Members’ Profile

All board members have satisfactory qualification along with relevant experience of operating in the steel industry


Board Effectiveness

The board conducts regular meetings to discuss the key issues and performance of the company. All agendas and issues are discussed during meetings before decisions are made by the board members.


Financial Transparency

Faruq Ali & Co are the external auditors of the company and they have expressed an unqualified opinion on the company's financial statements for the year ended June 30th,2024.


Management
Organizational Structure

Steelex (Pvt) Ltd has a streamlined organization structure with each department headed by an experienced resource. There are a total number of 120 employees who report to their respective department heads. Each head is responsible for the smooth functioning of their unit and reports the performance to the board.


Management Team

The management team has a vast experience relevant to their nature of work. Additionally, each member of the senior management has been with the company from a long time which shows their competency relevant to operating in the steel piping business.


Effectiveness

Currently Steelex (Pvt) Ltd has six functions namely (i) Marketing, (ii) Accounts, (iii) Production, (iv) Information Technology, (v) Sales, (vi) Quality Control. Each unit is overseen and supervised by an experienced resource that has been associated with the company since a long period of time.


MIS

The company has implemented ERP software to report its financials, operations and manufacturing activities. Furthermore the company maintains a detailed record of its receivables and payables using the software.


Control Environment

The company has established a quality control department that ensures the smooth functioning of both the plants along with maintaining the product quality. The company also ensures that all machinery is in working condition in order to maintain efficiency and reduce losses and wastage of material.


Business Risk
Industry Dynamics

The steel industry is categorized into three major segments based on products (i). Long steel products which consist of billets, rebar & beams (ii). Flat steel products which include hot rolled coils (HRC) & cold rolled coils (CRC) and (iii). Tubes & pipes. Long steel products contribute around 55-65%, flat steel products 30-35%, tubes & pipes around 8-10% and other products contribute 3-5% of the total steel sales. The demand for Flat Steel products is generated through various industries including autos (motor cycles), consumer durables, pipes, construction material, etc. There are three local players currently involved in supplying the CRC. International Steel Mills Limited – ISL (Since 2007) - Karachi Aisha Steel Mills Limited – ASML (Since 2005) - Karachi Hadeed Pakistan (Pvt) Limited (Since 2019) – Lahore Due to lower economic growth, high inflation and imported raw material various reason the market size of the CRC products has shrunk by almost 40%. However, with the improvement in monetary regulations and a stable exchange rate the market has seen signs of recovery in FY 24.


Relative Position

Currently, Steelex (Pvt) Ltd has a significant market share in the piping industry in the Southern region including Karachi and Baluchistan. The company has engaged wholesalers and has developed a distribution network along with its retail outlets to boost sales. The company has a fairly large presence in the South and is planning to penetrate in the North market in near future.


Revenues

The company generates its revenues from the sale of Steel and PVC products including GI, M.S and PVC pipes along with fittings. Additionally, the company also produces a minor chunk of its sales from exporting Steel pipes to Singapore and Trinidad. The company reported net increase in sales revenue over a period. Approximately 56% of the revenues are generated from the sale of steel pipes and fittings while the remaining is contributed by the sale of local PVC pipes.


Margins

The company's profit margins have shown significant improvement owing to sales growth during the period.


Sustainability

The company has been operating in the industry for over four decades which shows their commitment and progress. The company and its management has developed a strong product base which they plan to expand further in the future which shows their positive prospects.


Financial Risk
Working capital

The company's working capital management is a function of its inventory management along with receivable and payable days. The company has an adequate working capital management profile with decent gross working capital days


Coverages

Coverage ratios declined during 6MFY25 due to reduced cash flows generated from operating activities.


Capitalization

The company's reliance on Short Term Borrowings to manage its working capital needs has increased but remains at moderate level.
 
 

Jul-25

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Steelex (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
Management Audited Audited Audited
A. BALANCE SHEET
11. Shareholders' Equity 1,416 1,312 1,069 796
B. INCOME STATEMENT
1. Sales 4,841 8,081 5,305 4,354
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 19.8% 52.3% 21.8% 69.9%
b. Gross Profit Margin 5.4% 8.9% 13.5% 11.8%
c. Net Profit Margin 2.1% 3.0% 5.1% 6.4%
2. Working Capital Management
c. Current Ratio (Current Assets / Current Liabilities) 1.4 1.3 1.2 1.3
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 43.2% 46.9% 43.9% 63.7%

Jul-25

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Steelex (Pvt.) Limited

rating scale

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Jul-25

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Steelex (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

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