Going public: Aisha Steel Mills aims to raise Rs100 million

Shareholders to offload 3.7% of their stakes.

KARACHI: Aisha Steel Mills has decided to offer a piece of itself to the public through issuance of initial public offering.

The mill is a joint venture between Arif Habib Group, Metal One Corporation, a subsidiary of Mitsubishi, and Universal Metal One, one of the world’s largest steel trading company.

To kick start the drive to offer its shares to the masses, Aisha Steel Mills on Wednesday arranged a plant visit for investors where they explained all prospects including production capacity, financial health and market demand.

The company is divesting 3.73% stake or 10 million shares through offer for sale at par value of Rs10 per share. This offering will be done on July 3rd and July 4th 2012. The IPO will raise Rs100 million worth of capital.

In a pre-IPO portion, the company has already sold shares amounting to Rs234 million in April 2012.

International Steels, another steel producer, issued initial public offerings in June 2011 and received a positive response. The bid volume came out to 150.8 million shares, 2.4 times more than the initial offer of 61.8 million shares.

The company’s plant is spread over 50 acres and strategically located at Pakistan Steel Mills near Port Qasim, where most of the giant auto assemblers and vendors are located. The company is currently engaged in production of Cold Rolling Coil (CRC) from Hot Rolled Coil (HRC) with an initial capacity of 220,000 tons per annum. The company was incorporated in 2005 with a total investment of Rs9.4 billion.

The company intends to tap the huge gap between demand and supply of 408,000 tons of CRC in Pakistan with the largest capacity of 220,000 tons in the country. Currently, local companies are producing 175,000 tons of CRC against demand of 583,000 tons which is fulfill by imports.

The company will be supplied 16.5MW through the national grid line by Karachi Electric Supply Company. This national grid line comes under priority for the distribution company and has only witnessed a 6 minute outage in the past 10 years. The company has also inked an agreement with Sui Southern Gas Company for supply of 1.7 mmcfd gas to meet is energy requirement. It is pertinent to mention that a CRC mill can only operate on the national grid due to high torque.

Published in The Express Tribune, June 28^th, 2012.