Press Release
VIS Maintained Entity Rating of Naveena Steel Mills (Pvt.) Limited
Karachi, July 07, 2025: VIS Credit Rating Company Limited (VIS) has maintained the medium to long-term rating of Naveena Steel Mills (Pvt.) Limited (“NSML” or “the Company”) at ‘A-/A2’ (Single A minus/A Two). Medium to long term rating of ‘A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating has been revised to ‘Stable’ from ‘Negative’. Previous rating review was conducted on July 09, 2024.
NSML is a Private Limited Company incorporated in 2017. The principal business of the Company is the manufacture and sale of steel bars and billets. The registered office of NSML is on main Shahrah-e-Faisal, Karachi. The plant is located at Port Qasim, Karachi.
Assigned ratings reflect the medium to high business risk profile of Pakistan’s long steel (rebar) manufacturing sector, characterized by cyclical demand patterns, reliance on imported scrap, and energy-intensive operations. Sector profitability remains constrained due to input cost volatility, foreign exchange exposure, and limited pricing flexibility within a fragmented market structure. Construction-related demand remained weak in FY24 but has exhibited early signs of recovery in ongoing FY25, supported by monetary easing. Nonetheless, a sustained demand rebound remains contingent on broader macroeconomic conditions. Regulatory adjustments—such as the removal of import restrictions and the introduction of tax measures—have influenced raw material availability and competitive dynamics, though ongoing policy uncertainty continues to affect long-term business planning. The ratings also continue to draw comfort from the sponsor profile of the Naveena Group.
Revision in outlook is supported by easing pressure on the Company’s financial risk profile. Improved gross margins in the ongoing FY25, along with better managed stock-in-trade levels, have facilitated some reduction in short-term borrowing and supported improvement in debt servicing coverage. Recovery has also been aided by declining raw material and energy costs, supported by internal energy generation and lower benchmark interest rates. Liquidity remains sufficient to address any short-term coverage concerns.
Going forward, the ratings will remain sensitive to the Company’s ability to sustain improvements in coverage and profitability metrics amidst prevailing macroeconomic and sector-specific risks. The timely execution of planned energy cost reduction initiatives and the proposed expansion in renewable energy generation capacity will be key considerations.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Corporate Rating
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf