💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations and other operating income decreased by 57.8% from INR 634.63 Cr in FY24 to INR 267.28 Cr in FY25. For the quarter ended September 30, 2025, revenue from operations was INR 2.96 Cr, a significant decline compared to INR 66.31 Cr in the same quarter of the previous year.

Geographic Revenue Split

The company's manufacturing operations are limited to the local Indian market, representing 100% of its geographic revenue contribution. This domestic focus makes the company highly dependent on Indian demand and supply conditions.

Profitability Margins

The company registered a net loss of INR 27.30 Cr in FY25, a sharp reversal from a profit of INR 2.58 Cr in FY24. For Q2 FY26, the company reported a net profit of INR 35.76 Cr, which was primarily driven by an exceptional gain of INR 16.92 Cr from the sale of a rolling mill plant rather than core operational improvements.

EBITDA Margin

Operating profit before working capital changes for the half-year ended September 30, 2025, was INR 21.83 Cr. However, core operational profitability remains under pressure as revenue from operations for Q2 FY26 dropped to just INR 2.96 Cr.

Capital Expenditure

Property, Plant and Equipment decreased from INR 57.07 Cr as of March 31, 2025, to INR 53.70 Cr as of September 30, 2025. This reduction is largely attributed to the divestment of the 16-inch Rolling Mill Plant for a consideration of INR 17.00 Cr.

Credit Rating & Borrowing

Finance costs for FY25 were INR 4.48 Cr, and for the half-year ended September 30, 2025, they were INR 2.13 Cr. The company's debt-equity ratio increased by 63% to 1.96 in FY25 due to a substantial decrease in net profit, indicating higher financial leverage and risk.

⚙️ Operational Drivers

Raw Materials

The company consumes steel-related raw materials. Cost of materials consumed represented 55% of total revenue in FY25, amounting to INR 147.21 Cr.

Import Sources

Not disclosed in available documents, though the company identifies foreign exchange fluctuation as a major risk, suggesting some level of international sourcing or exposure.

Capacity Expansion

The company is currently contracting its capacity rather than expanding, evidenced by the sale of its 16-inch Rolling Mill Plant in September 2025 for INR 17.00 Cr to manage liquidity.

Raw Material Costs

Raw material costs were INR 147.21 Cr in FY25 (55% of revenue). For the half-year ended September 30, 2025, material costs were INR 14.89 Cr, reflecting reduced production volumes.

Manufacturing Efficiency

The current ratio fell by 53% to 0.18 in FY25, indicating severe liquidity constraints and poor manufacturing efficiency in managing current assets against liabilities.

📈 Strategic Growth

Growth Strategy

The company's strategy focuses on productivity improvement, safe work practices, and creative value creation. Currently, the company is undergoing a phase of asset divestment (selling the 16-inch Rolling Mill) to stabilize its financial position and manage debt.

Products & Services

The company produces steel and alloy products, specifically those processed through rolling mills.

Brand Portfolio

Shah Alloys.

🌍 External Factors

Industry Trends

The Indian steel industry is growing at approximately 5.9% YoY. However, the company is struggling with liquidity, as evidenced by its 'going concern' audit qualification and the need to sell core assets.

Competitive Landscape

The company competes in a global market dominated by large-scale producers in China, India, and Japan. Its small scale and current financial distress place it at a competitive disadvantage.

Competitive Moat

The company lacks a strong sustainable moat at present, given its negative net profit in FY25 and a critically low current ratio of 0.18, which threatens its ability to meet short-term obligations.

Macro Economic Sensitivity

The company is highly sensitive to the steel cycle. India's crude steel production grew 5.9% YoY to 37.32 mt in early 2025, but the company's revenue decline suggests it is not currently capturing this market growth.

Geopolitical Risks

Operations are subject to global demand-supply conditions. The company monitors production trends in major steel-producing nations like China (256.55 mt) and Russia (17.74 mt) as they influence global pricing.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with Indian Accounting Standards (Ind AS). Auditors have noted non-compliance with Ind AS 109 regarding the assessment of effective interest methods and impairment provisioning for financial assets.

Taxation Policy Impact

The company maintains a significant Deferred Tax Asset (net) of INR 77.78 Cr as of September 2025, which may be used to offset future taxable profits.

Legal Contingencies

The company's accounts are prepared on a 'going concern' basis despite financial stress. Specific values for pending court cases or labor disputes are not disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the company's ability to continue as a going concern given its current ratio of 0.18 and the 57.8% drop in annual revenue. Raw material price volatility and foreign exchange fluctuations remain high-impact risks.

Geographic Concentration Risk

100% of manufacturing is concentrated in India, making the company vulnerable to local economic downturns and domestic regulatory changes.

Third Party Dependencies

The company identifies vendor availability as a factor that could materially affect operations, though specific dependency percentages are not disclosed.

Technology Obsolescence Risk

Technology risk is identified as a major area of concern, requiring continuous improvement of processes to remain competitive in the steel industry.

Credit & Counterparty Risk

Credit control is a major risk. The auditor highlighted that the company has not evaluated provisioning for loss allowances on financial assets using the expected credit loss method, potentially masking bad debt risks.