Etihad Alloys Receives Stable Rating Amid Expansion and Economic Zone Status

RAHIM YAR KHAN: The Pakistan Credit Rating Agency Limited has maintained the entity ratings of Etihad Alloys Private Limited, affirming the company’s financial stability as it progresses with significant industrial projects. Based in Rahim Yar Khan, Punjab, Etihad Alloys is advancing its integrated steel melting and power generation operations, while also planning to diversify into the rebar segment.

The company has achieved substantial progress in its steel melting plant, which began construction in April 2021 and is nearing completion. The project, with a melting capacity of 250,000 metric tons per annum, has been financed through a mix of syndicated term finance and equity. The company has begun repayments on this financing, supported by consistent financial backing from its sponsors.

Etihad Power Generation Limited, a subsidiary, was merged into Etihad Alloys as of July 1, 2023. This merger aims to enhance operational synergies and ensure steady power supply for future steel operations. The power plant, with a capacity of 37.2 megawatts, is part of Etihad’s efforts to optimize resource utilization.

The company has also made strides in its power project, achieving financial closure in August 2024. Major equipment has been secured and on-site installations are underway, with commercial operations expected to start in fiscal year 2026.

Etihad Alloys’ expansion includes a re-rolling mill, targeting a capacity of 200,000 tons annually, with financial arrangements currently being finalized. This project aims for completion by December 2026.

The company’s designation as a Special Economic Zone in early 2025 marks a significant milestone, offering a 10-year tax holiday. This status is anticipated to bolster financial viability and profitability, benefiting from reduced production costs and enhanced cash flows post-commissioning.

The company’s ratings are contingent on meeting project milestones and achieving full operations. Continued sponsor support remains crucial for maintaining the financial risk profile as Etihad Alloys moves towards its targeted operational dates.