International Steels Limited (ISL) has announced that it intends to increase its cold-rolling capacity by another 400,000 tons, which will take the overall capacity to 1 million tons per annum.
The new capacity expansion will also include a pickling line and related facilities, according to a company notice sent to the Pakistan Stock Exchange (PSX) on Wednesday.
The project cost is estimated at Rs5.6 billion and the company expects it to be commissioned in a year.
ISL intends to finance the expansion through a combination of its own resources along with long-term loans.
After completion of the expansion, the country would have sufficient capacity to cater to most of the domestic demand for cold-rolled and galvanised coils, the notice added.
ISL currently has cold-rolling capacity of 600,000 tons per annum (tpa), galvanising capacity of 400,000 tpa and a colour-coating line of 84,000 tpa.
The company is continuously expanding its operations. In March 2016, ISL doubled its cold-rolling capacity to 500,000 tpa, which was further enhanced to 600,000 tpa in October 2016 after minor debottlenecking at existing rolling lines.
Estimates suggest that with current earnings before interest, tax, depreciation and amortisation (EBITDA) margins and 70% utilisation of the new cold-rolled coil line, it would have annualised incremental earnings per share (EPS) impact of up to Rs5.4, Topline Securities said in a report.
Furthermore, the National Tariff Commission’s (NTC) preliminary investigation into galvanised steel imports had been completed, wherein the NTC determined that the local industry was facing material injury from some Chinese producers, it said.
The report added that the final determination was around the corner and imposition of anti-dumping duty on galvanised steel would provide a further impetus to the company’s future prospects.