💰 Financial Performance

Revenue Growth by Segment

The company operates in a single business segment with a gross turnover of INR 32,690.27 Lakhs (INR 326.90 Cr). Product-wise performance includes Sponge Iron, Pig Iron, MS Ingot/Billets, and TMT Bars.

Geographic Revenue Split

The company derives a major portion of its revenue from semi-urban and rural areas in India, particularly around its works in Odisha.

Profitability Margins

Net Profit Margin is approximately 6.56% based on a Profit After Tax (PAT) of INR 2,143.39 Lakhs on a turnover of INR 32,690.27 Lakhs. Profit Before Tax (PBT) margin is 8.45% (INR 2,762.08 Lakhs).

EBITDA Margin

Not explicitly disclosed as a percentage, but ICRA notes a comfortable financial risk profile with steady improvement over the years.

Capital Expenditure

Planned capital expenditure for FY2026 is approximately INR 15-18 Cr, primarily for maintaining and upgrading its vertically integrated facilities.

Credit Rating & Borrowing

Long-term rating reaffirmed at [ICRA]BBB (Stable) for INR 51.00 Cr facilities; Short-term rating reaffirmed at [ICRA]A3+ for INR 6.50 Cr facilities. Borrowing costs are linked to these investment-grade ratings.

⚙️ Operational Drivers

Raw Materials

Iron ore and coal are the primary raw materials, collectively constituting more than 80% of the total cost of production.

Import Sources

Not specifically disclosed, but the company is heavily dependent on the domestic market and railway movement for sourcing these materials.

Key Suppliers

Not specifically named, but the company lacks captive mines and acts as a price taker in the open market for iron ore and coal.

Capacity Expansion

Current operations include a DRI kiln for sponge iron and a mini blast furnace for pig iron. A new subsidiary was incorporated during the year to potentially expand capacity, though it has not yet commenced operations.

Raw Material Costs

Raw material costs exceed 80% of production costs. Profitability is highly sensitive to market price fluctuations of iron ore and coal as the company does not have captive mines.

Manufacturing Efficiency

Efficiency is driven by the presence of DRI kilns and mini blast furnaces which allow for integrated production of semi-finished and finished steel products.

Logistics & Distribution

Distribution is focused on semi-urban and rural markets; logistics are impacted by increased ship/container freights and lower availability due to geopolitical events like the Red Sea crisis.

📈 Strategic Growth

Expected Growth Rate

3.2%

Growth Strategy

Growth is targeted through vertical integration, producing steel as per market requirements, and leveraging the Indian government's infrastructure spending. The company also incorporated a new subsidiary during the year to explore new operational avenues.

Products & Services

Sponge iron, Pig Iron, MS Ingot/Billets, and TMT Bars.

Brand Portfolio

Suraj Products Limited.

New Products/Services

The company is focusing on TMT Bar production to capture higher value in the finished steel segment.

Market Expansion

Targeting growth in rural and semi-urban Indian markets where demand for construction steel is uplifting.

Market Share & Ranking

Not disclosed, but noted as a secondary steel producer in a fragmented industry.

🌍 External Factors

Industry Trends

The industry is shifting towards more stringent Environmental, Social, and Governance (ESG) norms, including Scope 3 operations. The steel industry remains inherently cyclical.

Competitive Landscape

Intense competition from a large number of organized and unorganized players in the secondary steel sector.

Competitive Moat

The primary moat is the vertically integrated nature of operations, which provides a cost advantage and reduces earnings volatility compared to non-integrated peers.

Macro Economic Sensitivity

Highly sensitive to Indian GDP and infrastructure spending. Global growth is estimated at 3.2% for 2025, which influences global steel demand and raw material pricing.

Consumer Behavior

Uplifting rural demand driven by government infrastructure projects is a key trend affecting demand for TMT bars and construction steel.

Geopolitical Risks

Ongoing Russia-Ukraine conflict and Red Sea crisis pose risks to shipping operations, freight costs, and supply chain reliability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent Labour Laws and environmental pollution norms applicable to the steel and sponge iron industry.

Environmental Compliance

Subject to increasingly stringent environmental norms and ESG reporting requirements for Scope 3 operations.

Taxation Policy Impact

Effective tax rate is approximately 22.4% based on PBT of INR 27.62 Cr and PAT of INR 21.43 Cr. The company has material uncertain tax positions under dispute.

Legal Contingencies

The company has disclosed pending litigations in Note 41 of its financial statements, including material uncertain tax positions involving significant judgment for outcome determination.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material prices (iron ore/coal) which represent >80% of costs, and potential labor shortages in a labor-intensive industry.

Geographic Concentration Risk

Operations are concentrated in Odisha, India, with a revenue focus on domestic rural and semi-urban markets.

Third Party Dependencies

High dependency on Indian Railways for the movement of bulk raw materials and finished goods.

Technology Obsolescence Risk

The accounting software lacked audit trail features for PPE, inventory valuation, and payroll records for part of the year, representing a internal control gap.

Credit & Counterparty Risk

Not disclosed, but the company maintains an internal audit system to monitor financial reporting and asset safeguarding.