Press Release

VIS Credit Rating Company Downgrades Entity Ratings of Aisha Steel Mills Limited

Karachi, December 13, 2022: VIS Credit Rating Company Limited (VIS) has downgraded the entity ratings of Aisha Steel Mills Limited (ASL) to BBB+/A-2 (Triple B Plus/A-Two) from A-/A-2 (Single A Minus/ A-Two). Outlook on the assigned ratings is ‘Stable’. Long term entity rating of ‘BBB+’ reflects adequate credit quality and reasonable protection factors. Risk factors are considered variable if changes occur in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment, sound liquidity factors and company fundamentals. Access to capital markets is good. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on March 10, 2022.

The assigned ratings to ASL are underpinned by demonstrated support of the Company’s major sponsor, Arif Habib Group, while also incorporating the Company’s market positioning as one of the only two local players in the Cold Rolled flat steel industry. ASL’s rating factors in the business risk of the flat steel industry, which is considered high, given the inherent volatility in the international prices of Hot Rolled/Cold Rolled Coils and their conversion margins, sensitivity to changes in exchange rate and interest rate .
The demand outlook for steel products is considered to be depressed due to the slowdown in construction and automobile industries. n view of the weak economic fundamentals of the country, high benchmark rates, political uncertainty, inflationary pressures and the restrictions on quantity of imports of CKD kits a significant demand slowdown in the automobile industry is expected. Demand in other CRC consuming sectors is likely to weaken in tandem with depressed GDP growth.
Rating revision reflects pressure on liquidity indicators and debt servicing. Topline of the Company was recorded noticeably lower during 1QFY23 vis-à-vis the same period last year. Consequently, margins for the period was adversely affected, with the entity posting an overall loss of Rs. 1.4b comprising an exchange loss of Rs. 1.2b. In these circumstances maintaining last years' value and volumetric turnover maybe challenging wherein further borrowing to meet debt service obligations, in case sponsors support is not timely available, may further impact capitalization indicators. Going forward, improvement in the capitalization level, overall financial profitability and liquidity indicators in line with the projected levels will be important from ratings perspective.

For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) or the undersigned (Ext: 207) at 021-35311861-71 or email to

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (August 2021)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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