Press Release
VIS Reaffirms Instrument Ratings of Mughal Iron & Steel Industries Limited’s Sukuk 5
Karachi, June 10, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the instrument rating of 'AA-' (Double A Plus) to the Sukuk 5 of Mughal Iron and Steel Industries Limited. The medium to long-term rating of 'AA-' denotes high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on May 30, 2025.
Mughal Iron & Steel Industries Limited (“MISIL” or “the Company”) was incorporated in Pakistan on February 16, 2010, as a public limited company. The Company operates across both ferrous and non-ferrous segments, with its core business centered on the manufacturing and sale of mild steel products. MISIL’s manufacturing and warehousing facilities are located on Sheikhupura Road, Lahore, while its sales centers operate from Badami Bagh, Lahore. The Company’s only investment is in its subsidiary, Mughal Energy Limited (“MEL”), which is nearing completion of a 36.50 MW hybrid captive power plant intended to supply electricity to MISIL’s operations.
The assigned ratings reflect Mughal Iron and Steel Industries Limited’s established position in Pakistan’s steel sector, supported by its operating track record and a diversified product portfolio spanning ferrous and non-ferrous steel products. The ratings incorporate the Company’s stable business profile, long-standing relationships in domestic and export markets, and continued focus on operational efficiency. Integrated operations across key production stages support cost optimization, while ongoing investments in captive and sustainable energy initiatives are expected to lower power costs and support margins over the medium term.
MISIL issued a medium-term, rated, secured, privately placed Sukuk of up to PKR 2.5 billion on April 18, 2025, with a tenor of 15 months and maturity on July 21, 2026. The instrument carries a profit rate of 3-month KIBOR plus 145 bps per annum, with profit payable quarterly in arrears. Repayment obligations are supported through a Debt Payment Account (DPA), funded via quarterly profit deposits five working days prior to each payment date. For the bullet principal repayment at maturity, one-third of the principal amount is required to be deposited on the 60th day of the final quarter, with the remaining balance deposited on the 75th day. In addition, a Debt Service Reserve Account (DSRA) of PKR 165 million is maintained with an AA- rated bank under the lien of the investment agent. The Sukuk is secured through a first joint pari passu charge over MISIL’s present and future fixed assets, with a 25% margin, while the initial ranking charge is to be upgraded to pari passu status within 120 days of the first disbursement. All quarterly profit payments have been made on time, and the maturity payment mechanism has been funded in accordance with the stipulated terms and conditions.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue Rating Criteria
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf