ISL to raise Rs three billion through public offering

International Steels Limited (ISL) plans to raise Rs 3 billion ($35 million) through public offering. The mega project has 0.25 million tons production capacity and a joint venture of International Industries Limited (IIL), International Finance Corporation (IFC) and Sumitomo Corporation of Japan (SCP).
Talking to newsmen after the inauguration of ISL, Managing Director Towfiq Habib Chinoy said this steel project has completed at a cost of Rs 8.7 billion out of which some Rs 4.35 billion was invested by IIL in shape of equity, making ISL its wholly owned subsidiary.
However, now IIL is seeking to offload nearly 45 percent of ISL shares, while Sumitomo and IFC have each already agreed to purchase 10 percent of ISL shares and this will leave 25 percent equity, which is roughly around Rs 1 billion, for offering it to various investors. He said ISL is the largest private investment in the value-added flat-rolled and coated steel industry in Pakistan. The project will unlock the dormant potential for developing the country's engineering and hi-tech manufacturing industries.
"We have completed this physical 400,000 sqft facility in 22 months with use of local talent and went into trial production at the end of 26 months and commercial production in 28 months," he informed. This steel complex would initially have production capacity of 250,000 tons of steel including 100,000 tons cold rolled sheet and 150,000 tons of zinc coated sheets to meet the deficit of these products in Pakistan, the MD said. This complex also includes an 18 MW co-generation power plant and a 100 cubic meters per hour reverse osmosis plant.
Two plants remain to be commissioned, the skin-pass mill, which is in its final stage and should see operation in next 10 days. Secondly, acid regeneration plant is likely to start by the end of this month, Chinoy said. "We have provided the civil work to expand our capacity to 400,000 tons and expected to meet this level of production in 2014 to reduce the deficit in the local market," he said and added that initial production capacity will substitute Pakistan's steel imports thus conserving valuable foreign exchange for the country.
Talking about the domestic steel market, MD ISL said that Pakistan's per capita steel consumption, which is largely unorganised, is estimated at 38-40kg, which is significantly lower than regional average of 207.8kg per capita. The country's demand for cold rolled coils is estimated at more than 500,000 tons per annum and against this demand local production for cold rolled coil is estimated at 70,000 tons by Pakistan Steel Mills and 40,000 by IIL catering for 14 percent of the domestic demand, he pointed out.
The products manufactured by ISL will be sold to wholesalers and directly to the industrial customers as well. In addition one of the major users of the product is IIL which is expected to procure up to 40,000 tons of CRC produced by ISL ie 40 percent of its capacity, he added. He said newly-built ISL will provide raw materials for the infrastructure development and add value to the Pakistan's economic growth through the steel sector which is currently in its infancy stage.
ISL has strong emphasis on recruiting and retaining the best professionals who are central to its business model and the management team boasts exemplary industrial backgrounds from top-tier institutions across the world. Further, the company's sponsors also have a record of more than 45 years in the steel industry enabling it to better navigate through the business, Chinoy said. "ISL will benefit from Sumitomo's participation by getting expertise in the areas of maintaining highest quality standards, cost management, inventory procurement and resource management," he added.
IIL, the sponsor of ISL, is a premium producer of steel tubing and galvanised pipes in the country and Pakistan Cables is part of the group which is a prominent manufacturer of cables and wires. ISL is the most recent addition to the family and has been established to engage in the business of manufacturing Cold Rolled Coils (CRC) and Hot Dipped Galvanised Coils (HDGC), he elaborated. Earlier, the Rs 8.7 billion worth steel mill was inaugurated by Mrs Almas Chinoy, wife of the late Amir Chinoy who was the founding Managing Director of International Industries Limited. The inauguration ceremony was also attended by Kazuhisa Togashi, Senior Managing Director of Sumitomo Corporation, Takashi Okabe, Executive Assistant and General Manager JFE Steel Japan, Klaus Grimm, Senior Specialist at SMS-Siemag and representatives from the International Finance Corporation (IFC).