Lahore, April 26, 2019 (PPI-OT): 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.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com