Amreli Steels Limited (“Amreli” or “the Company”) is a public limited company incorporated in 1984 under the Companies Ordinance. The Company was listed on the Pakistan Stock Exchange on 1 December 2015 and is traded under the Engineering sector.

Amreli Steels operates two advanced re-rolling plants, strategically located in S.I.T.E. Karachi and Dhabeji. These facilities utilize the latest hot re-rolling technologies in the industry, with a nameplate capacity of 180,000 metric tons and 425,000 metric tons of rebars per annum, respectively. Furthermore, the melt shop, located in the industrial zone at Dhabeji, Port Qasim, spans 65 acres of land and has a nameplate capacity of 600,000 metric tons per annum.

Amreli Steels is focused on the manufacturing and sale of two key product categories: steel billets and rebars. The rebar portfolio includes Grade 60 Deformed Steel bars and Xtreme bars (G-500W). The Company operates the largest billet manufacturing plant in Pakistan with a capacity of 600,000 tons. A critical component of its industrial activity is power management; the Company’s majority power Amreli Steels is focused on the manufacturing and sale of two key product categories: steel billets and rebars. The rebar portfolio includes Grade 60 Deformed Steel bars and Xtreme bars (G-500W). TA critical component of its industrial activity is power management; the Company’s majority power requirement is fulfilled by K-Electric, ensuring consistent operations for its high-capacity facilities.requirement is fulfilled by K-Electric, ensuring consistent operations for its high-capacity facilities.

The Company’s shareholding remains clearly defined, with the Akberali family holding a substantial majority stake of approximately 75%, reinforcing their significant influence over strategic direction, while the remaining equity is distributed among the general public, commercial banks, mutual funds, and other financial institutions to ensure compliance as a listed entity. In line with the Master Restructuring Agreement (MRA) signed in October 2025, the sponsors fulfilled the liquidity commitment through a Rs. 1 billion equity injection via the issuance of 40 million new ordinary shares at Rs. 25 per share (Rs. 10 par value + Rs. 15 premium), fully subscribed by Mr. Shayan Akberali, whose pre-issuance holding of 12.60% increased materially to 22.98%, post-injection.

The sponsors of Amreli Steels, given their significant shareholding, remain key to maintaining the Company’s ownership stability. In light of recent operational and financial challenges, they have provided periodic support to sustain the business and protect their controlling stake. While these measures have helped preserve the existing ownership structure, continued reliance on sponsor support highlights underlying pressures on the Company’s financial position.

The Akberali family brings a legacy of over six decades of cumulative experience in successfully managing enterprises within the steel and allied industries. Despite this extensive background, the management of the business over the past few years has coincided with unprecedented challenges across the sector, marked by restricted raw material imports, a surge in finished steel imports, aggressive capacity expansion funded through debt, and resultant liquidity constraints. This period of intense market disruption strained the Company’s competitive alignment with the rapidly evolving industry landscape and highlighted areas requiring rapid operational and strategic adjustments. The family’s deep industry knowledge and proven track record position them to effectively manage these challenges and implement the necessary measures for sustained recovery.

Amreli Steels functions as the flagship entity for its sponsors, who have historically and demonstrably affirmed their commitment to the Company by injecting necessary funds whenever specific capital needs arose. In the recent distressed phase, the sponsors once again demonstrated this commitment through timely liquidity support. This continued willingness of the owners to stand behind the Company reinforces its financial foundation despite the prevailing challenges.

The overall control and strategic direction of the Company are entrusted to a seven-member Board of Directors (BoD). This structure comprises four members drawn from the sponsoring family, including the Chairman and the Chief Executive Officer (CEO), and three independent members. The leadership is currently helmed by Mr. Abbas Akberali, who serves as the Chairman, while his son, Mr. Shayan Akberali, holds the position of Chief Executive Officer. The separation of the Chairman and CEO roles is intentionally implemented to further enhance the Company’s governance structure. Additionally, the inclusion of three independent members significantly strengthens the overall governance framework, ensuring a balanced and effective oversight mechanism is in place. Ms. Mariam Akberali holds a non-executive role on the board, contributing to its diverse perspective.

The management team is led by individuals with substantial experience and strong academic credentials. Mr. Abbas Akberali, the current Chairman, brings unparalleled experience to the Board, backed by a strong background in metallurgical engineering and an MBA from Columbia University. His extensive experience, spanning over four decades in the steel industry, adds significant value to the Board’s strategic decision-making process. He has also played a key role in driving reforms within Pakistan’s steel industry and is a founding member of the Hunaar Foundation. Mr. Shayan Akberali, who joined Amreli Steels in 2002, has been instrumental in the Company’s growth over the past two decades. A The rest of the Board comprises experienced professionals from diverse backgrounds, contributing to governance and oversight. However, the overall effectiveness of the Board remains closely tied to the leadership of key family members, given their central role in strategic direction and decision-making.

To ensure sound internal control and focused oversight, the Company has established two key board committees: (i) the Audit Committee and (ii) the Human Resource & Remuneration Committee. The Audit Committee is strategically composed of three independent members and one non-executive director, ensuring independence in financial reporting review. Overall, attendance at board meetings is consistently strong, which reflects the high commitment and active participation of the board members in the governance process. This consistent engagement is vital for effective decision-making and strong corporate supervision.

The Company ensures a high degree of financial transparency through its engagement with reputable external auditors, M/s BDO Ebrahim & Co., Chartered Accountants, who maintain a valid Quality Control Review (QCR) rating. The auditors have concluded that the financial statements for the period ending June 2025 present a true and fair view of the Company’s financial position and performance. However, they included a Material Uncertainty Related to Going Concern in their report for the period ending June 2025. Subsequent to the balance sheet date, the Company successfully executed the Master Restructuring Agreement (MRA) with its banking syndicate, which has materially alleviated the liquidity constraints and restructured its debt obligations.

Amreli Steels undertook a significant initiative in FY2017 to revamp its corporate reporting structure aligned with the best practices of the Code of Corporate Governance, aiming to further define and streamline its internal reporting lines. The revised multi-tier structure now includes two senior-level positions: the COO-Strategy and the Chief Financial Officer (CFO). The COO-Strategy receives reports from six distinct functional areas: Marketing, Government and Public Relations, Information Technology, Corporate Affairs & Liaison, New Businesses, and CSR and Communication. The CFO oversees the remaining eight essential functions, including Sales, Finance, Supply Chain, Administration & IR, Plant Operations, Human Resources, Security and Vigilance, and Environmental Health & Safety. This clear demarcation ensures specialized oversight and accountability across all business verticals.

The Company’s operations are overseen by a capable and well-rounded leadership team, with Mr. Shayan Akberali, the eldest son of Mr. Abbas Akberali, serving as the Chief Executive Officer (CEO). A qualified engineer, Mr. Shayan has been with the Company for over two decades and plays a pivotal role in its growth strategy. He is supported by key executives, including Mr. Hadi Akberali, the younger son, who holds the critical position of COO-Strategy, contributing valuable strategic insights to the Company’s long-term planning. Mr. Fazal Ahmed serves as COO-Operations, overseeing the critical day-to-day operational management of the facilities. Furthermore, Mr. Taha Umer serves as the Chief Financial Officer, leveraging his expertise to lead the Company’s financial management. Overall, this management team is regarded for its strength, deep industry understanding, and balanced skillset, positioning the Company for continued success and growth.

To drive efficiency and continuous improvement, Amreli has established five dedicated management committees that focus on reviewing critical performance areas of the Company. These committees are instrumental in overseeing a wide range of key operational aspects. Their scope includes daily production analysis, yield analysis, mechanical and production breakdowns, and downtime analysis.

Amreli has implemented a comprehensive SAP Enterprise Resource Planning (ERP) solution, which is central to its operational efficiency and decision-making framework. This system incorporates and facilitates the following operational modules: Production Planning, Material Management, Sales and Distribution, Finance, Controlling, and Human Capital Management, which utilizes the Success Factors module for talent management. Reports from these integrated modules are generated on a daily basis, providing timely and accurate information to support efficient, data-driven decision-making and continuous operational monitoring.

The Company has established decent internal control systems and procedures across its functions, primarily to maintain the high quality of its products and safeguard its assets. In addition to regular quality audits conducted by independent consultants, the Company operates an advanced in-house computerized testing laboratory for product inspection. Furthermore, the Company is certified with ISO 9001 by Lloyd’s Register Quality Assurance, ensuring that its manufacturing processes and operational procedures align with international quality standards. To enhance customer service, the Company has established a dedicated sales office to manage and address customer inquiries efficiently. Amreli Steels is also firmly committed to maintaining a safe and environmentally responsible workplace by adhering to OHSAS 18001 and ISO 14001 certifications, demonstrating its commitment to safety and environmental stewardship.

During FY25, total local steel production in Pakistan declined to approximately 7.2 million metric tons (mln MT), reflecting a 14.3% YoY decrease. Production of Billets and Ingots (Long Steel) fell sharply by 22.4% YoY to 3.8 mln MT, while Coils & Plates (Flat Steel) decreased modestly by 2.9% YoY to 3.4 mln MT, primarily due to weaker domestic demand in the construction and industrial sectors. The lower demand led to reduced production, which in turn caused overall local steel supply to fall to 10.4 mln MT, a 7.9% decline from FY24. To meet market requirements and take advantage of comparatively lower prices, imports of finished steel products increased to 3.2 mln MT (10.3% YoY). Meanwhile, steel scrap imports rose slightly to 2.8 mln MT, valued at USD 1,271 million, as industry players replenished inventories amid constrained local production.

Amreli Steels holds a long-standing position as one of Pakistan’s largest rebar producers, with strong market dominance in the southern region. It has built an extensive distribution network supported by sales offices in major economic hubs and certified retailers, ensuring wide market accessibility and efficient logistics. However, like the rest of the industry, the Company was severely affected by prolonged demand weakness, a surge in steel imports, and sector-wide liquidity constraints. Its prior debt-funded capacity expansion amplified the downturn’s impact, leading to sharper volume declines, working capital challenges, and temporary operational halts, particularly at the Karachi facility. The Master Restructuring Agreement (MRA) has been executed, with expectations of restoring working capital lines and regularizing banking facilities. However, a sustained resumption of operations remains to be seen. Accordingly, Amreli’s ability to regain lost ground will depend on the effective implementation of the restructuring and improvement in market conditions.

In the first half of FY2026, revenue stood at PKR 7,150 million, down 18.8% compared to the corresponding period last year. The continued pressure on revenues stems from a combination of sector-specific challenges as well as company-specific constraints. While the Master Restructuring Agreement (MRA) has been executed and is expected to support the restoration of working capital lines, a sustained resumption of operations is yet to materialize. Consequently, any recovery in volumes will depend on the effective implementation of the restructuring and improvement in market conditions.

Profitability faced considerable strain due to both operational inefficiencies and financial charges. The low-capacity utilization across the manufacturing facilities led to an inability to absorb fixed costs efficiently, significantly escalating production expenses. This pressure caused a sharp contraction in core profitability, resulting in the FY2025 Gross Margin falling to a narrow 0.5%. In 1H FY2026, strategic pricing adjustments (to stimulate demand) resulted in a gross loss of PKR 290 million (-4.1% margin). Operating performance also remained under pressure amidst the reduced scale. However, the combined impact of lower finance costs post-restructuring and a significant one-time accounting gain on loan modification (PKR 3,073 million) led to a a net profit of PKR 1,174 million for 1H FY2026 (versus a loss of PKR 1,873 million in 1H FY2025). These metrics reflect the severity of past distress but also the tangible benefits of the MRA in stabilizing the bottom line.

The Company’s ability to sustain itself came under severe pressure during FY2025 amid the challenging industry environment, ongoing financial difficulties, and substantial debt obligations. Acute working capital constraints resulted in temporary operational disruptions, including a complete halt at the Karachi facility. To ensure long-term viability, the Company executed a Master Restructuring Agreement (MRA) with the banking syndicate in October 2025, supported by a Rs. 4 billion sponsor liquidity injection. The MRA has restructured debt over a 10-year tenor, converted short-term facilities into long-term, restored working capital lines including LC openings. While operations have now resumed and immediate pressures have been alleviated, the Company’s sustainable recovery remains subject to continued macroeconomic stabilization, normalization of domestic steel demand, achievement of adequate sales volumes, timely generation of profits, and strict adherence to the repayment schedule under the MRA.

The Company’s working capital position remains weak; however, some improvement has been observed following the execution of the Master Restructuring Agreement (MRA) in October 2025, which has provided temporary breathing space. The current ratio increased to 7.5x as at December 2025 (June 2025: 2.3x), largely due to the reclassification of short-term borrowings into long-term facilities and the expected restoration of working capital lines, including the ability to open fresh Letters of Credit. Operationally, inventory levels were reduced and receivables management improved, with raw material days declining to 90 (June 2025: 127) and receivables days to 43, while trade payables averaged 19 days. As a result, gross working capital days declined to 133 and net working capital days to 114 (June 2025: 171 and 147, respectively), supported in part by higher cash and bank balances. Despite these improvements, the sustainability of the working capital position will depend on the effective utilization of restored facilities and normalization of operations.

As the Company remains in the early stages of implementing the Master Restructuring Agreement executed in October 2025, coverage indicators stayed subdued for the half-year ended December 2025, although the restructuring and monetary easing have begun to provide initial relief on financing costs. EBITDA interest cover improved only marginally to 0.1 times (FY25: 0.0x), while free cash flow from operations stayed negative at PKR 131 million. As a result, the FCFO-to-total debt service ratio (Finance Cost + CMLTB + Excess STB) stood at 0.1x, producing a negative debt payback period. Finance costs for the half-year declined 17% year-on-year to PKR 1,870 million, benefiting from lower benchmark rates and the deferral of markup and principal under the MRA. Nevertheless, half yearly core operating cash generation continued to fall short of debt-servicing requirements. The one-time accounting gain of PKR 3,073 million on loan modification supported the net profit but has no bearing on recurring coverage strength. With the restructuring measures now in place, coverage metrics are expected to strengthen gradually as operations gain momentum in the coming periods.

Capital structure leverage moderated slightly but remains elevated. Total borrowings to stood at 64.4% as at December 2025 (FY2025: 68.1%), with short-term borrowings now representing only 35.1% of total debt (FY2025: 81.2%) following conversion of approximately PKR 11,000 million into long-term facilities under the MRA. Overall debt stood at PKR 21,400 million against shareholders’ equity of PKR 12,624 million (increased by the Rs. 1 billion sponsor equity injection). Interest/mark-up payable days improved sharply to 31 (FY25: 426), reflecting restored liquidity, while the average borrowing rate eased to 16.6%. The restructured debt profile (including deferred interest until FY27–29 and phased principal repayments) provides breathing room, yet the high overall leverage and significant deferred obligations mean that sustained deleveraging and timely servicing will continue to depend on macroeconomic stabilization, demand recovery and timely profit generation. Following are the key contours of MRA:

1. Conversion from Short-term to long-term loan
2. Extension in existing long-term loan
3. Interest moratorium for three years
4. KIBOR charge only
5. Availability of cushion in facility limits
6. Liquidity commitment of Rs. 4 billion through sale of non-core assets and equity injection by sponsors of Rs. 1 billion.