| Experienced management and established track record of operations-
Chandi Steel Industries Limited (CSIL), incorporated in 1978, is managed by Mr. Devendra Prasad Jajodia and Mr. Harsh Jajodia and a team of experienced personnel. The company is engaged in manufacturing of Cathode Collector Bar, Anode Bar, Copper Inserted Cathode Bar Assembly, Anode Stub and Grinding Media Rod for the aluminium industry. The directors possess over two decades of experience in this line of business. The long-standing experience of the promoter and long track record of operations has helped the company to establish comfortable relationships with key suppliers and customers. The company’s clientele includes well-established players such as Emirates Global Aluminium, Vedanta Ltd, Hindalco Industries Ltd, Aluminium Bahrain B.S.C., and Bharat Aluminium Co. Ltd. to name a few. Acuite believes, the company will benefit from the extensive experience of the promoters in maintaining long standing relations with suppliers and customers.
Healthy Financial Risk Profile
The financial risk profile of the company continues to remain healthy, marked by strengthening net worth, low gearing and strong debt protection metrics. The net worth of the company grew to Rs. 208.79 Cr. as on March 31, 2025 as compared to Rs. 176.05 Cr. as on March 31, 2024. This improvement in net worth is mainly due to the retention of profits. Further, the gearing level improved to 0.01 times as of March 31, 2025, compared to 0.06 times as of March 31, 2024. The debt protection metrics are strong, with the debt service coverage ratio (DSCR) of 5.03 times in FY 2025, compared to 8.35 times in the previous year. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.26 times as of March 31,2025, compared to 0.46 times as of March 31, 2024. The Net Cash Accruals to Total Debt (NCA/TD) stood at 19.40 times in FY 2025, compared to 6.22 times in the previous year. Acuite believes the financial risk profile of the company is likely to remain healthy on account of expected steady net cash accruals and absence of any major debt-funded capex over the near term.
Moderate Working capital management -
The working capital operations of the company remained moderately intensive marked by a GCA of 131 days in FY2025, compared to 140 days in FY2024. The debtor collection improved marginally and stood at 27 days in FY2025, compared to 31 days in FY2024. The average collection period is around 30- 60 days. The inventory days for the company stood at 74 days in FY2025, compared to 66 days in FY2024. Additionally, the creditor days stood at 41 days in FY2025, compared to 40 days in the previous year. The average credit period is around 30 - 45 days. CSIPL avails need based working capital limits against fixed deposits. Acuité believes that the working capital operations of the company will continue to remain moderately intensive over the medium term.
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| Moderation in Operating Performance
CSIL’s operating income declined marginally to Rs. 542.25 Cr. in FY2025 from Rs. 568.59 Cr. in FY2024. The reduction was primarily driven by softer demand in key end-user sectors, heightened competition from lower-priced imports, and a moderation in price realizations. The operating margin decreased to 9.71 per cent in FY25 from 15.34 per cent in FY24, while the PAT margin declined to 6.05 per cent from 10.42 per cent. This contraction was largely due to higher raw material costs, particularly copper, along with increased production and logistics expenses. Additionally, the decline in PAT was influenced by a marginal rise in interest costs, primarily attributable to foreign bank charges. In contrast, FY24 benefited from lower input costs and more favourable pricing conditions, contributing to stronger margins. Acuité believes that the company’s ability to consistently improve its scale of operations along with the profitability margins will remain a key rating sensitivity.
Customer concentration risk
The company faces moderate customer concentration risk with the top 5 customers collectively account for approximately 72 per cent of the total revenue, indicating a notable concentration of revenue among a limited number of clients. Further, of which Top 3 clients namely Emirates Global, Vedanta Limited and Hindalco Industries Limited. constitutes for around 55 per cent of the revenue., highlighting a significant dependency on a few key customers and thus posing a customer concentration risk. However, the same is largely mitigated as company is having long standing relations with its customers along with the tailor-made product manufactured by the company as per the specification provided by the client. Any changes in the financial and business risk profile of these key customers can impact the credit profile of CSIL. Acuite believes ability of the company to maintain healthy relations with its customers while improving the business and financial risk profile would remain as a key rating sensitivity.
Susceptibility of profitability to fluctuations in the raw material prices, forex risk in a competitive industry
The major raw material of the company is copper and steel. The company’s performance remains vulnerable to cyclicality in the copper and steel prices as demand for steel and copper depends on the performance of the end user segments. The company operates in a highly competitive and fragmented industry characterised by low entry barriers, which results in intense competition from the large number of organised and unorganised players present in the downstream segment providing similar products and services. Hence, the bargaining power of the company remains low due to the competitive nature of the industry. Any volatility in the prices of the raw materials has a direct impact on the profitability margins of the company.
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