Lahore : 10-May-2012
The Pakistan Credit Rating Agency (PACRA) has maintained rating of 'A-' (Single A Minus) of privately placed secured Sukuk of PKR 880mln by Amreli Steels Limited (ASL). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The rating reflects the established franchise of the company in re-bar manufacturing segment. The rating incorporates well-entrenched participation of Akberali Family - the major sponsor - in operations of the company. Additionally, the sponsors have demonstrated financial commitment. The company has lately commissioned a billet manufacturing plant. This is expected to ensure raw material supply for core product - rebars, while gradually improving profit margins. With enhanced capacity utilization, generating additional operational cash flows, the financial profile of the company, though still weak, has started improving. The grace period of the sukuk has ended. However, the rating draws comfort from staggered repayment structure.
The Company: ASL, incorporated in 1984, is principally engaged in manufacturing of reinforcement bars. The company is producing steel bars according to British and American standards, with an installed capacity of 150,000 tonnes per annum. The company is backward integrated for its raw material through its recently commissioned billet manufacturing plant (Capacity: 190,000 tons of billets per annum).
The company is majority owned by Akberali Family, which has been engaged in steel and allied businesses since early forties. Mr. Abbas Akberali, the CEO of the company, is a metallurgical engineer and holds an MBA degree from Columbia University, USA. He has close to four decades of experience in local and the Middle-East markets. He is assisted by a team of relatively young but well-qualified professionals; majority of them belong to the sponsoring family.
The Sukuk: The Sukuk of PKR 880mln was issued in December 2009. The issue is for a term of seven years with grace period of two years ending Dec-11. The profit is payable at 3 Month KIBOR plus 250 bps quarterly in arrears. At least 24% of the issue amount (PKR 211mln) would be redeemed during a period of three years and the balance (PKR 669mln) amount in sixth and seventh year in eight equal quarterly installments. The redemption has started from Mar-12.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the securitys market price or suitability for a particular investor.
-Ends-
Analyst
Samiya Mukhtar
(+92-42-35869504)
samiya@pacra.com
www.pacra.com
Disclaimer
This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA.
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