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Experienced promoters and an established track record of operations
OSSAPL has a long operational track record in the iron and steel industry spanning two decades. Mr. Dinesh S. Bharuka started his career in 1986 with his family business of dealing in scrap metal at various steel processing plants in Maharashtra. In 2003, he and his brother, Mr. Rajendra Bharuka, incorporated this company and entered the steel business. The extensive experience of promotors has helped the group establish long-term relationships with its customers. OSSAPL’s manufacturing facility is located in Jalna, MH, with billet production capacity of five lakh metric tons per year and five lakh fifty thousand metric tons of TMT bars per year. In FY23, OSSAPL acquired Sanvijay Alloys and Power Limited as part of a backward integration initiative. In FY2024, the group acquired a thermal power plant with a capacity of 40 MW from Kiloskar Group.
Moderation in the operating performance
The group’s revenues have declined to Rs. 1,359.18 Cr. in FY2025 (Est.) as against Rs. 1551.03 Cr. in FY2024. The decline in revenue is due to a decline in the quantity sold. In Q1FY26, the group has recorded revenue of Rs. 563.63 Cr. (this is without considering the inter party sales). The operating margins of the group stood at 14.02 per cent in FY2025 (Est.) and 14.40 per cent in FY24. Further, the group PAT margin has stood at 6.64 per cent in FY2025 (Est.) as against 6.59 per cent in FY2024. The improvement in PAT margins is majorly due to increase in other income. Acuité believes that the business risk profile will improve in the medium term.
Healthy financial profile risk
OSG’s financial risk profile is healthy marked by healthy capital structure and coverage indicators. OSG’s net worth stood Rs. 595.13 Cr. as on March 31, 2025 (Est.) as against Rs. 467.05 Cr. as on 31 March, 2024. The increase in net worth is due to accretion of profits to reserves and capital infusion. The gearing ratio has improved to 1.61 times as on March 31, 2025 (Est.) as against 1.58 times as on March 31 2024. The total debt of the group stood at 960.64 Cr. as on March 31, 2025 (Est.) consists of Rs. 404.54 Cr. Term loans, Rs. 169.55 Cr. of loan from promotors, short-term working capital debt of Rs. 361.66 Cr. and CPLTD of Rs.24.89 Cr. Interest coverage ratio stood comfortable at 3.60 times as on March 31, 2025 (Est.) and 3.93 times as on March 31, 2024. The net cash accrual (NCA) to total debt (TD) is 0.14 times as on March 31, 2025 (Est.) as against 0.20 times as on March 31, 2024. The Total outside liabilities to Tangible net worth stood at 1.82 times for FY2025 (Est.) as against 1.91 times in FY2024. SAPL is undertaking a ₹770 Cr. capex over the next three years to set up a 650×2 TPD DRI plant, a 1.2 million TPA pellet and beneficiation plant, and a 50 MW power plant to support sponge iron needs for OSAPL, aiming for 80–85 per cent capacity utilization. Of the total cost, ₹500 Cr. is bank-funded (sanctioned), and ₹250 Cr. will come from internal accruals, with ₹450.98 Cr. already incurred as on date. The project is expected to be operational by Sept 2026. Meanwhile, OSSAPL has no near-term capex plans, with a ₹41.6 work in progress reflecting prior civil work for future furnace expansion, focusing currently on optimizing existing capacity. Acuite believes that timely completion and stabilisation of the ongoing capex will remain a key rating that is monitorable.
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Moderately intensive working capital management
OSG’s working capital operations remained moderately intensive in nature as reflected by its gross current asset (GCA) days of around 196 days in FY25 (Est.) as against 119 days in FY24. Company maintains an inventory of about 60 days in FY25 (Est.) as compared to 50 days in FY24. OSG debtor’s days stood at 20 days in FY25 (Est.) as against 26 days in FY24. Creditor’s days also stood at 17 days in FY25 (Est.) as against 19 days in FY24. Further, the average bank limit utilisation for fund-based limits stood moderate at ~ 76 per cent and non-fund based limits stood high at ~ 92.50 per cent. Acuite believes, that the working capital operations of the group will remain at same level as evident from collection mechanism and comfortable inventory levels over the medium term.
Intense competition and inherent cyclical nature of the steel industry
The steel-rolling industry remains fragmented and unorganized. The company is exposed to intense competitive pressures from many organized and unorganized players, along with its exposure to the inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature. Business operations also face competition from cheaper Indonesian and Chinese imports. A substantial increase in imports may adversely impact realization and volumes and, hence, remain a key monitorable.
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