International Steels Limited has begun production from its new plant to emerge as the country’s biggest cold roller with one million tons of output capacity and to shed reliance on steel inbound shipments that account for 10 percent of the country’s imports.
“…(the) company’s state of the art rolling mill has commenced production (from) 21 June, 2018. This addition has increased the rolling capacity of the company to 1,000,000 metric tons per annum,” the steel mill said in a statement on Wednesday to Pakistan Stock Exchange.
“With this expansion, ISL (International Steels) will be the largest producer of flat products in the country resulting in significant reduction in dependence on imported steel products as well as invaluable savings in foreign exchange.”
The company had announced its expansion plan in February 2017 to meet the ever-rising demand of infrastructure development under the China Pakistan Economic Corridor projects.
The cost of the expansion was estimated at Rs5.6 billion, which was arranged through its own finances and long-term bank loans.
Analyst Misha Zahid at Arif Habib Limited said the company’s cold rolling capacity that was doubled from around 550,000/year previously turned “it to be the first million tons steel rolling plant in the country”.
The rival Aisha Steel’s expansion is due in 2019 with an expected production capacity to 0.8 million tons.
Adnan Sami Sheikh, assistant vice president at Pak Kuwait Investment said the country has zero indigenous iron production, while steel imports account for nearly 10 percent of the country’s import bill.
Approximately, 45 percent of steel imports are value-added. “ISL’s expansion serves to bridge the gap between the country’s ever increasing steel requirement and the domestic capacity for value addition,” Sheikh said.
“This expansion will allow ISL to produce a greater amount of zinc coated or galvanised sheets which are further up the steel value chain.”
He further said International Steels will retain its monopoly on domestic production of galvanised steel up until Aisha’s expansion comes into play next year.
The new productions include 100,000 tons of cold-rolled products, 350,000 tons of hot-dip galvanized and 50,000 tons of colour coated steel, which are offered in coil or sheet form.
All products cater to the engineering and manufacturing industry as a premium raw material for transformation into any number of value-added products for domestic and export markets.
Analysts said the new capacity will cater to the growing demand in automobile, appliances, and construction industries.
International Steels, in a document, said the company will continue to strengthen its position in the domestic market while maintaining its export footprint due to improvement in regulatory climate.
Analysts said the company’s profitability is expected to sharply increase in coming fiscal years due to increase in production capacity.
Sheikh said ISL will be eligible to a 10 percent tax credit on Rs5.6 billion investment.
The steel mill recorded Rs3.234 billion profit in the nine months ended March 31 from Rs2.016 billion in the corresponding period last year. The company’s sales jumped 40 percent to Rs34.817 billion during the period.
Source: The News
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