SALSTEEL - S.A.L Steel

📊 NSE: SALSTEEL 🏢 Steel - Sponge Iron 📅 Last Updated: 12/14/2025 12:34

💰 Financial Performance

Revenue Growth by Segment

Revenue is derived from Sponge Iron, Ferro alloys, and Power. While specific segment growth percentages are not disclosed, the Net Capital Turnover Ratio improved by 35% YoY, rising from 14.33% to 19.34%.

Profitability Margins

The Net Profit Ratio experienced a substantial decline of 1550%, falling from 0.08% in the previous year to -1.18% in FY 2024-25. Return on Equity (ROE) also dropped by 1516%, from 1.12% to -15.91%.

EBITDA Margin

Core profitability as measured by Return on Capital Employed (ROCE) decreased by 46% YoY, falling from 8.04% to 4.33%.

Capital Expenditure

The company reported a potential impairment of Capital Work in Progress (CWIP) amounting to INR 1.01 Cr (Rs 100.94 lakhs) which was not recognized in the financial statements for the year ended March 31, 2025.

Credit Rating & Borrowing

The Debt-Equity Ratio increased by 54% YoY to 4.58%, up from 2.97%, driven by losses and increased working capital borrowing. The company has sanctioned working capital limits exceeding INR 5 Cr from banks.

⚙️ Operational Drivers

Raw Materials

Sponge Iron is a primary raw material and product. The company specifically monitors sponge iron price trends to manage purchase planning and ensure profitability.

Raw Material Costs

Inventory turnover ratio decreased by 27% YoY to 6.03%, indicating slower movement of materials. The company uses an Enterprise Resource Planning (ERP) system to monitor price trends and plan procurement.

Manufacturing Efficiency

Manufacturing efficiency is impacted by inventory management, with the inventory turnover ratio declining from 8.26% to 6.03%.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth is currently centered on a major corporate restructuring via an Open Offer by Sree Metaliks Limited to acquire up to 3,76,39,342 equity shares (26% of expanded share capital) at INR 25 per share. Operationally, the company focuses on price-trend-based procurement and maintaining internal financial controls.

Products & Services

Sponge Iron, Ferro alloys, and Power.

Brand Portfolio

SALSTEEL

Strategic Alliances

The company is the target of an acquisition/open offer by Sree Metaliks Limited (Acquirer) for a 26% stake valued at approximately INR 94.10 Cr.

🌍 External Factors

Industry Trends

The steel industry is currently facing price volatility in raw materials like sponge iron. The company is positioning itself for a change in control through the open offer by Sree Metaliks Limited.

Competitive Landscape

Key competitors include other regional sponge iron and ferro alloy producers; market dynamics are currently influenced by the acquisition interest from Sree Metaliks Limited.

Competitive Moat

The company maintains an integrated power generation capability alongside its sponge iron and ferro alloy production, providing some utility cost advantages.

Macro Economic Sensitivity

The business is highly sensitive to steel industry cycles and sponge iron price volatility.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with Ind AS accounting standards; however, it was noted for non-compliance with segment reporting requirements under Ind AS 108.

Taxation Policy Impact

The company has pending cases with multiple tax authorities including Service tax, VAT, Income Tax, Excise, and Customs.

Legal Contingencies

Pending litigations exist with Service tax, VAT, Income Tax, Excise, and Customs authorities. Additionally, the company used short-term funds of INR 12.25 Cr for long-term purposes, which was flagged in the auditor's report.

⚠️ Risk Analysis

Key Uncertainties

Significant risks include the 1550% decrease in net profit, the potential INR 1.01 Cr hit from CWIP impairment, and the diversion of INR 12.25 Cr in short-term funds for long-term use.