Vertical Expansion to Make STPL’s ETP More Competitive
Siddiqsons Tin Plate Limited (STPL) held its analyst briefing yesterday to discuss backward integration plan of the company. The company is considering establishing a Cold Rolled Coil (CRC) plant with the capacity of 200k MT/annum. The projected is estimated to cost around PKR 6bn and will be financed through Debt to Equity ratio of 70:30. Hence, the management is planning to raise minimum PKR 1.8bn through right issue. The plant is expected to start commercial operations by 4QFY20 and will enable the Company to be self reliant on CRC requirement of existing tin plate whereas any excess production will be sold in the market. The plant will also help in reduction of import duties as currently the company imports CRC on which it pays duties of 17% to 25% depending on quality, whereas post CRC plant the company will import Hot Rolled Coil (HRC) on which there is only 5% custom duty. Please note that the management has also appealed National Tariff Commissions’ (NTC) verdict with a hearing scheduled on May 16, 2018. The management specifically clarified that the company will not come into direct competition with existing domestic manufacturers of CRC due to differences in thickness.
Siddiqsons Tin Plate Limited is engaged in the manufacturing and sale of tin plates, cans and other steel products, and trading of refined chromite. The Company's canning products include canning line, oil and lubricants, paints, edible oils and associated products, packed food cans and miscellaneous cans. Its tinplate products include tinplate coils and tinplate sheets. It produces tin plate fine sheets, which include bright, stone and matt. Its tinplate products' applications include food cans, edible oil and ghee cans, beverages cans, paints and chemical product cans, crown caps for beverages, decorative cans, lubricant tins, aerosol cans, grease and polish containers, fuel and air filters, and telephone cable for steel taping purposes. Its tin plant is located at Winder Industrial Estate in the province of Balochistan. The project has a capacity to produce 120,000 tons per annum of tin plate. The canning plant is located at Malir, Karachi in the province of Sindh.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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