January 25, 2021 (MLN): Aisha Steel Mills, in a response to enquiry letter sent by SECP, has stated that it is not aware of any specific reason/material information which may have resulted in unusual movement in price or volume of the company.
However, the company said that the substantial increase in market price might be based on the general knowledge of investors regarding overall economic recovery including the steel sector and rising international prices of HRC / CRC resulting in sharp increase in their local demand. Turnaround started in the first quarter which was reflected in the financial results of the company for the quarter ended September 30, 2020.
The company also reproduced the following extracts from its Director’s report for the same period, pertaining to the existing business operations and future outlook:
‘With enhanced capacity and wider and diversified product line, your Company is fully geared to realize the future growth opportunities. Company's revenues are likely to increase in the coming years. Since both the ASML and ISL have increased their respective capacities substantially, imports will face tough competition. Local demand is expected to pick up sharply as the pandemic has subsided. Auto demand is picking up and the overall growth momentum is expected to return. The Construction Industry is likely to experience growth momentum and may have positive impact on demand of CRC. It is expected that the global prices and primary margins would remain firm.
‘Second half of the year witnessed COVID-19 catastrophe. All leading economies of the world suffered. Pakistan and Aisha Steel were no exception. Towards the very end of the year, the COVID-19 curve flattened. Introduction of business friendly government policies helped to jump start the economy. A 7-Shape ' recovery is being anticipated.
‘The latter part of the year however brought some opportunities. Economic activity has started gaining momentum post relaxation of the nationwide lockdown in May 2020. Interest rates have been reduced by 625 basis points and various other steps were taken by the Government to ease the cost of doing business in Pakistan. The Government is also striving hard for the success of “Naya Pakistan Housing Scheme” as well as CPEC projects. These steps will provide a boost to the construction sector, which in turn is also expected to improve sales in steel sector as well.’
With regards to the future outlook, the report said: ‘The pickup in auto sales and revival of construction sector augers well for both CRC and GI demand in the local market. In the near term, the outlook looks promising and the company expects to achieve set budgeted targets both in terms of production as well as sales’.
‘In view of the above, it is most respectfully submitted that the Company has complied with its relevant obligations under the applicable laws and all information which may have caused such fluctuation in the share price of the Company has duly been disclosed’, ASTL said in its letter to PSX.
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