Introduction to INIL International Industries Limited (INIL) is one of Pakistan’s oldest and most recognized steel manufacturers. Over the years, it has cemented its position as a market leader in the pipe industry, earning its place among the top 25 companies on the Pakistan Stock Exchange (PSX) for 16 consecutive years. On the global stage, INIL is recognized among the top 50 manufacturers, specifically in tubes and pipes, exporting to over 60 countries across six continents. Its product range serves industries such as fabrication, furniture, infrastructure, automobiles, and fluid transmission.
Financial Performance in FY24 INIL experienced a 9% year-over-year (YoY) increase in revenue during FY24, driven primarily by a 30% YoY rise in polymer sales. The company faced significant increases in production costs, particularly energy, with a 51% YoY hike, translating to PKR 7,065 per ton. Additionally, domestic freight costs rose by 31% due to the implementation of the axle load regime, while export freight costs dropped by 37% YoY. Despite these challenges, INIL continued to navigate the market effectively, though exchange losses and lower dividend income from ISL led to reduced profitability compared to FY23.
Impact of Global Market Trends A significant trend impacting INIL’s business was the 9% YoY decline in international hot-rolled coil (HRC) prices, attributed to weakened industrial demand in China, which was exacerbated by a property crisis. The resulting challenges for Chinese steelmakers created ripple effects globally, with INIL experiencing reduced sales in this crucial market.
Operational and Strategic Developments Amid rising costs, INIL has been proactive in managing its operational efficiency. The company installed a 3.5 MW solar plant to reduce overall power costs. Moreover, INIL has been actively involved in the pre-mining project activities of Reko Diq, which will require housing for around 2,000 workers. INIL, through its subsidiary Chinoy Engineering & Construction Pvt. Ltd, will undertake the construction of accommodation camps, with 51% shareholding retained by INIL and its subsidiaries.
Challenges and Outlook While INIL has seen strong polymer pipe sales, particularly to major clients like SNGPL and SSGC, its export market is facing headwinds due to rising interest rates and a global slowdown in construction activities. The Chinese market, in particular, has become a challenge as companies adopt the just-in-time inventory approach, limiting export sales growth for INIL. Additionally, geopolitical factors like the change of government in Afghanistan and the economic crisis in Sri Lanka have led to negligible sales in those markets.
In the domestic market, INIL’s capacity utilization has been below 40% for the past two years, reflecting broader economic challenges, including high inflation, high utility costs, and elevated interest rates. For the next six months, the outlook for the domestic steel sector remains sluggish. However, INIL is optimistic about expanding its subsidiaries to new markets such as Saudi Arabia, Europe, and other Middle Eastern countries to meet market demands.