September 28, 2020: Agha Steel Industries is going to sell 100,000 metric tons of low-carbon billets worth approximately Rs 10.5 billion per annum to Horizon Steel, a press release said on Monday.
The two companies have signed a memorandum of understanding (MoU) that ensures Agha Steel will reliably supply the intermediate steel product that the downstream steel industry uses as raw material.
“Thanks to product innovation and heavy investments in R&D, Agha Steel is able to manufacture for the first time in Pakistan refined low-carbon quality billets that are used in the wire rod industry. Until now, the downstream industry heavily relied on expensive imported raw material. That’s going to result in huge import substitution and big benefit for our national kitty,” said Suleman Lakhani, chief marketing officer of Agha Steel.
The company uses the latest European electric arc furnace technology supplied from Danieli to produce billets, a transitional steel product that can either be turned into steel bars used in construction or transformed into wire rods to manufacture many high value engineering products.
“With the realization of this MoU, Agha Steel’s sales are going to grow by 68 per cent from the current level within a year. We foresee many such contracts with companies operating in the downstream industry. The availability of good quality raw materials is going to enlarge this industry to its true potential” added the CMO of Agha Steel, which is going public next month to finance its expansion drive.
Unlike most local steel-makers that use the traditional induction furnace for melting scrap, Agha Steel has invested in a high-efficiency and environment-friendly electric arc furnace. It recently increased its billet-making capacity from 250,000 MT to 450,000 MT a year.
Speaking on the occasion, Horizon Steel CEO Shoaib Sultan said it was encouraging to witness that steel products can now be made end-to-end within Pakistan. “I expect the downstream industry will see tremendous growth in coming years and the future looks very bright” he said.
Sep 28, 2020: The government would spend around Rs18 billion during the current fiscal year for physical planning and housing sector programmes, which would be implemented by various ministries, divisions and departments to address the increasing urbanization issues and challenges.
Pakistan has the highest rate of urbanization in South Asia and as per Population Census of 2017, urbanization had increased from 32.52 percent to 36.38 percent during 1998 to 2017, according to an official document available with APP.
However, based on a modified definition of urban settlements, ratio of urban to rural population could be 40 percent and even higher, therefore, it was estimated that, by 2025, nearly half of the country's population would be living in cities, it added.
The document said rapid urbanization was already stretching cities’ resources in the country. The tremendous challenge of absorbing such a massive number of people in urban areas and providing them with shelter, food, employment, healthcare, education, municipal services and recreation facilities was made more difficult, causing shortage of urban facilities and resources, skilled manpower and good governance.
Despite the challenges, urban areas demonstrate immense economic potential to generate growth in the country.
The federal government has also announced relief packages for construction and agriculture sectors and a subsidy of Rs 30 billion under Naya Pakistan Housing Scheme. The provincial governments also announced relief packages for vulnerable people and exemption in taxes.
In addition, the Naya Pakistan Housing and Development Authority (NAPHDA) had been established for undertaking Prime Minister’s Programme for construction of five million affordable houses to the general public.
Special relief package for construction industry had been announced by the government to boost construction activity besides, Establishment of Construction Industry Development Board (CIDB) to facilitate the construction sector as well as to strengthen the regulatory framework.
Besides, the Federal Government Employees Housing Authority (FGEHA) has launched two new projects in Islamabad and Rawalpindi for provision of apartments to the federal government employees under PM’s Naya Pakistan Housing Programme, it said.
September 28, 2020: Passenger traffic at airlines in several key Asia-Pacific (APAC) markets is likely to remain well below 2019 levels in 2021, despite a recovery, Fitch Ratings says.
The pace of the recovery will hinge on each market's relative success in bringing the coronavirus pandemic under control, helping to improve passenger confidence and reduce the risk of further travel restrictions, as well as its share of international traffic, which we expect to stay weaker than domestic volume.
Our forecasts are based on the assumption that a vaccine or treatment will not become available at scale in 2021, but that progress is made in controlling the pandemic. Airline passenger volume could improve faster than we forecast if an effective vaccine is distributed sooner than we believe or if there is more success in containing the pandemic. However, we foresee flat demand in 2021 that is well below the 2019 base should there be limited progress on this measure.
China has witnessed a rapid recovery in air passenger traffic. Mainland China may see rising monthly domestic revenue passenger kilometres (RPK) - a measure of traffic - by October 2020, thanks to its success in containing the pandemic. Average RPKs for 2021 may recover to at least the 2019 level if China evades another wave of the pandemic. Yoy declines in monthly RPKs have been narrowing over the last few months, but we think total RPKs for 2020 may still fall by around 40%, with domestic RPKs being around 30% lower. China's six major listed airlines, which have joint market share of about 75% by RPK, saw a 19% yoy decline in aggregate mainland China RPK in August 2020. The yoy decline has shrunk each month since March 2020, when passenger traffic was down by 69%. The six airlines' RPK growth can be seen as a proxy for the overall sector.
We expect average RPKs for Indian airlines to decline by around 65% in 2020 and remain 40% below the 2019 level in 2021. The plunge in 2020 RPKs includes strong performance in 1Q20, which was largely unaffected by pandemic-related restrictions, and an extremely weak 2Q20, when domestic flights were prohibited for two months from 25 March. Domestic air passenger traffic has remained weak since fights resumed, with August data showing a 76% yoy drop in passenger numbers. We expect a lagged recovery in 2021, assuming quarantine fatigue and increased comfort with airlines' efforts to mitigate risks, with higher passenger traffic despite a vaccine or treatment not being available at scale.
Passenger traffic at Vietnamese airlines should rebound faster than in other southeast Asian markets due to the country's low incidence of COVID-19 cases. We forecast average RPKs of around 55% of the baseline level in 2020 and 90% in 2021. Singapore Airlines, on the other hand, could witness the sharpest 2020 RPK fall, at 70%, due to its complete dependence on international routes, with 2021's RPKs staying at around 50% below 2019 levels. We expect Indonesia and the Philippines, where further COVID-19 spread remains a high risk, to see average RPK levels at 35% of the baseline in 2020 and 60% in 2021. Airlines in Thailand and Malaysia are also likely to report similar levels, as they would be affected by weak international traffic volume despite the countries' success in controlling the pandemic.
We expect Australia's 2020 RPKs to be at around 30% of 2019 levels and believe a meaningful recovery will be delayed to the middle of 2021, as governments of the three most populous states - comprising the Golden Triangle route between Sydney, Melbourne and Brisbane - indicate that borders may only reopen toward the end of this year. We expect capacity to return to pre-pandemic levels towards end-2021 or early 2022, with total 2021 RPKs increasing to around 60% of pre-pandemic levels and to around 85% in 2022. Domestic tourism will be Australia's main demand driver, while we believe business will recover at a more gradual pace. Airline surveys indicate that Australians are keen to resume travelling when it is safe to do so, with good demand for flights when services have resumed without restrictions.
September 28, 2020: VIS Credit Rating Company Limited (VIS) has assigned the initial entity ratings of ‘A/A-2’ (Single A/A-Two) to Mughal Iron & Steel Industries Limited (MISIL). The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors.
Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned rating is ‘Stable’.
MISIL is considered one of the major players in the long steel sector of Pakistan. Product portfolio of the company comprises steel rebars, girders and t-iron. Steel rebars and girders are the key revenue generating products. The assigned ratings take into account extensive experience of sponsoring family who has been involved in the steel sector since 1950. The ratings draw comfort from sizeable scale of melting and re-rolling mill capacities, underpinned by installation of two new furnaces and completion of balancing, modernization and replacement (BMR) of existing re-rolling mill in 4Q2020.
While the company exhibited healthy increase in revenue and profits in the past few years, slowdown in economic activity and outbreak of COVID-19 has adversely affected financial performance during 9MFY20. Gross margins declined as the company could not pass the full impact of higher raw material prices onto consumer. However, the ratings factor in projected growth in volume sales, underpinned by recent uptrend in rebar prices, which along with the completion of BMR of re-rolling mill, is expected to bode well for the margins to some extent due to energy and overheads efficiencies.
Liquidity position of the company was also under stress owing to significant decline in cash flows generation mainly as a result of higher finance cost and taxes paid, which resulted in low debt service coverage. While improvement in cash flow generation is expected in FY21 and beyond on account of higher projected profits along with an expected major tax benefit, coverages are projected to remain slightly above the minimum threshold over the next three years as major debt repayments would fall in that period.
Increase in equity base is attributable to internal capital generation and contribution from sponsors. Debt profile of the company comprises a mix of short-term and long-term financing facilities. Working capital requirements are met through short-term borrowings. The company has also mobilized long-term debt during the period under review to finance the said BMR. Resultantly, though manageable, gearing and debt leverage were slightly on a higher side.
With the issuance of Sukuk instrument and higher short-term borrowings for working capital requirements, leverage indicators are projected to increase in FY21 and decrease subsequently. Going forward, the ratings are dependent on achievement of projected revenue and profits, improvement in cash flow generation and coverages, and maintenance of leverage indicators within prudent limits. While the demand for steel sector is showing signs of recovery on account of construction industry relief package and the government’s spending on construction of development projects, sustainability of demand over the long-term period will be an important rating factor.
September 28, 2020 (MLN): The Union of Small and Medium Enterprises (UNISAME) has invited the attention of all stakeholders by stating that the responsibility of promotion and safeguarding the reputation of basmati lies on all and they need to protect it collectively with dedication.
President UNISAME Zulfikar Thaver said that UNISAME is proud of all the state institutions who have rolled up their sleeves to challenge the Indian exclusive geographical indications (GI) tag for basmati to the European Union. The Indian exclusive claim is based on malfides as Indians on several occasions have admitted in world forums that basmati belongs to both India and Pakistan. Some Indian courts have also given judgement in the matter and defined basmati judiciously.
Unisame has received firm commitment from the state institutions of leaving no stone unturned to protect Pakistan's rights and has appealed to all rice exporters to make special efforts to promote the export of basmati rice globally.
Thaver also requested the farmers to grow more basmati and adopt best technology to get best yield to remain competitive.
UNISAME also urged the Intellectual Property Organization ((IPO) and the Registrar Trade Marks to expedite the pending cases and decide in the best interest of justice. The SME union also appealed to the Sindh High Court to take up the matter on top priority basis and conclude in the best interest of justice to enable the stakeholders substantiate their cases based on their fair judgements in world forums.