💰 Financial Performance

Revenue Growth by Segment

Total revenue grew by 19.56% YoY to INR 349.32 Cr. The Sponge Iron segment revenue increased by 28.63% from INR 271.58 Cr to INR 349.32 Cr, while the Trading segment (plastic packaging) was discontinued, contributing 0% compared to INR 20.59 Cr in the previous year.

Geographic Revenue Split

Not disclosed in available documents; however, the plant is located in Jharkhand, targeting the domestic secondary steel sector.

Profitability Margins

Net Profit Margin improved from 2.55% to 2.98% due to operational revival. However, Operating Profit Margin declined from 4.00% to 2.57%, reflecting increased pressure from raw material costs and operational overheads.

EBITDA Margin

Operating Profit Margin stands at 2.57%, a decline of 143 basis points YoY. Core profitability is driven by the Facility User Agreement which ensures steady operating income despite volatile market conditions.

Capital Expenditure

The company completed significant overhauling and renovation of the plant and railway siding prior to January 2022; specific INR values for FY25 planned CAPEX are not disclosed.

Credit Rating & Borrowing

The company has a negative Debt-Equity ratio of -2.42. It recently completed the repayment of a INR 32.50 Cr rehabilitation loan principal to AIADA in monthly installments of INR 1.25 Cr as of August 2024.

⚙️ Operational Drivers

Raw Materials

Coal and Iron Ore are the primary raw materials, representing the majority of the cost of production. Capital service charges also constitute a significant cost component.

Import Sources

Sourced domestically; historically dependent on Central Coalfields Limited for coal supply.

Key Suppliers

Central Coalfields Limited is identified as a primary historical supplier whose non-supply previously caused a plant shutdown.

Capacity Expansion

Current installed capacity is 2,10,000 MT per annum across three kilns. No specific expansion timeline is provided, as the focus is on sustaining current third-party operations.

Raw Material Costs

Raw material costs are highly volatile and market-driven. The company employs a strategy of exploring various avenues for procuring high-quality iron ore and coal to protect margins.

Manufacturing Efficiency

Inventory turnover improved from 2.99 times to 4.54 times, indicating better movement of stock and improved working capital efficiency.

Logistics & Distribution

The company utilizes its own renovated railway siding for the transport of raw materials and finished sponge iron, reducing reliance on road logistics.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is targeted through the continued operation of the plant via the Facility User Agreement with Vanraj Steels Private Limited. The strategy focuses on wiping out past losses through consistent operating income and leveraging the demand for mild steel in the rural housing sector.

Products & Services

Sponge Iron (high-quality pre-reduced ferrous material) used by induction and electric arc furnaces.

Brand Portfolio

Bihar Sponge Iron Limited (BSIL).

New Products/Services

The company recently discontinued its plastic packaging trading business to focus exclusively on its core sponge iron manufacturing assets.

Market Expansion

Focusing on the rural economy and housing construction sectors, which are the largest users of mild steel produced from sponge iron.

Strategic Alliances

Facility User Agreement dated 30.12.2020 with Vanraj Steels Private Limited, Mr. Manoj Kumar Agarwal, and Parasnath Advisory Private Limited for plant operation.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward increased demand from the construction and infrastructure sectors. The company is positioning itself to benefit from the government's thrust on the rural economy.

Competitive Landscape

Competes with other sponge iron manufacturers and suppliers of steel scrap, which is a direct substitute for sponge iron in induction furnaces.

Competitive Moat

The company's moat is its 2,10,000 MTPA installed capacity and its own railway siding, which provides a logistical cost advantage. However, this is offset by the lack of captive raw material sources.

Macro Economic Sensitivity

Highly sensitive to rural income levels and government infrastructure spending, as these drive the demand for housing and mild steel.

Consumer Behavior

Increased disposable income in rural areas is shifting demand toward permanent housing (pucca houses), increasing mild steel consumption.

Geopolitical Risks

Indirect impact through global commodity price volatility affecting iron ore and coal prices.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Companies Act 2013 and SEBI (LODR) Regulations. The company previously operated under a BIFR rehabilitation scheme until the abatement of SICA in 2016.

Environmental Compliance

The company maintains a CSR obligation of INR 18.56 Lacs, which was fully spent in FY 2024-25.

Taxation Policy Impact

Subject to standard Indian corporate tax laws; the company is currently utilizing past losses to offset tax liabilities.

Legal Contingencies

Pending LPA in the High Court of Jharkhand regarding exchange fluctuation on foreign currency loans. Settlement of interest on the INR 32.50 Cr AIADA loan is pending mutual agreement with the Government of Jharkhand.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the settlement of interest on restructured loans and the outcome of the pending LPA in the High Court, which could impact the timeline for the net worth turning positive.

Geographic Concentration Risk

100% of manufacturing operations are concentrated at the Umesh Nagar plant in Jharkhand.

Third Party Dependencies

High dependency on Vanraj Steels Private Limited for plant operation and revenue generation under the Facility User Agreement.

Technology Obsolescence Risk

The plant uses coal-based kiln technology; while standard for the industry, it is subject to evolving environmental norms.

Credit & Counterparty Risk

Debtors turnover ratio changed significantly from 1,57,186 times to 53 times, indicating a shift in the credit profile of the counterparty under the new operating agreement.