Press Release

VIS Reaffirms Entity Ratings of International Steels Limited

Karachi, June 21, 2019: VIS Credit Rating Company Limited has reaffirmed the entity ratings of International Steels Limited (ISL) at ‘A+/A-1’ (Single A Plus/A-One). The long term rating signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short term rating of ‘A-1’ depicts high certainty of timely payment where liquidity factors are excellent and supported by good fundamental protection and minor risk factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on April 04, 2018.

Assigned ratings of ISL derive strength from the company’s prominent market position in the flat steel industry. Ratings also reflect healthy financial risk profile and strong corporate governance infrastructure. Given the global economic slowdown, the company currently faces significant volatility in its core product margins and accordingly in its business risk. Moreover, the local market has also experienced dumping from Russia and South Korea which has kept margins for flat steel producers under pressure. Going forward, management intends to geographically diversify its customer portfolio to take advantage of dynamics in the international market to support margins. Developments in this regard will materialize over time.

Financial profile of the company continues to remain sound despite slight weakening in profitability levels during HY19. Profitability is expected to remain dampened on account of lower volumetric sales and capacity utilization. In order to overcome the same, the company is now focusing on improving its customer service by further building local market presence along with exploring the international front. During 2018, ISL completed the expansion of its cold rolling facility to 1,000,000 MT in view of anticipated demand from other industries including automotive and consumer durables. Given the recent expansion, ISL’s gearing levels depicted an increase. However, liquidity profile and capitalization indicators are projected to remain sound.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or Ms. Muniba Khan (Ext: 215) at 021-35311861-71 or fax to 021-35311872-3.

Atiq Anwar Mahmudi

Applicable Rating Criteria: Corporates (May 2016)

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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