Mughal Steel to invest Rs1 billion for expansion

Announcement comes as part of 6-month financial results in which profit dipped 2%

KARACHI: Mughal Iron and Steel Industries Limited has announced to invest Rs1 billion to improve and expand steel re-rolling process, billets and in-house power generation capacity, subject to board and banks’ approvals.

Company secretary Muhammad Fahad Hafeez said in a notification to the Pakistan Stock Exchange that the board of directors has resolved to conduct BMR (Balancing, Modernization and Replacement) of its existing bar re-rolling mill.

“The BMR will involve addition of new re-rolling stands, finishing lines and other improvements to the existing mill in order to enable it to adhere to high and faster re-rolling process with state of art PLC control system. This will result in improvement efficiency of the re-rolling process,” he said.

The board has also resolved to increase the current power generation capacity of its existing 9.3-megawatt gas captive power plant by adding six additional engines of 3.1 megawatts each.

“As a result, the total gross installed power generation capacity of the captive power plant will be enhanced to 27.9 megawatts. The said enhancement is expected to play a fundamental role in meeting increased demand of billet to support the existing re-rolling activities,” he said. “The total cost of the...projects would be approximately Rs1 billion.”

The commencement and completion of these projects will be subject to the finalisation of the decision of board of directors relating to source of finance to be used, which in case of debt financing will further depend upon approval of financing arrangements from bank(s) and/or financial institutions and in case of equity financing upon decision of the board of directors, he said.

Net profit drops

The firm’s net profit dropped almost 2% to Rs474.22 million in the half-year ended December 31, 2016 due to lower sales.

It had booked a profit of Rs481.98 billion in the same half of the previous year.

Earnings per share dropped to Rs3.77 from Rs3.83 in the corresponding period.

Its share price decreased 2.61%, or Rs3.02, to Rs112.35 with a turnover of 293,000 shares. Sales fell 12% to Rs8.68 billion in the half-year period, down from Rs9.86 billion.

The firm booked a profit of Rs217.11 million (earnings per share at Rs1.73) in the last quarter, which was 16% lower than Rs257.12 million (earnings per share at Rs2.04) in the corresponding quarter.

Published in The Express Tribune, February 28^th, 2017.

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