­Acuité has consolidated the business and financial risk profiles of Gagan Ferrotech Limited (GFL), Gajanan Iron Private Limited (GIPL), Shakambhari Overseas Trades Private Limited (SOTPL) and Spintech Tubes Private Limited (STPL) together referred to as the ‘Gagan Group’ (GG). The consolidation is in the view of common promoters and management, intercompany holdings, operational linkages between the entities and a similar line of business.

Extensive management experience, long operational track record 
Gagan Group’s promoters are associated with the steel industry for over two decades and have established forward as well as backward integrated operations. Group has a diversified product mix which includes pellets, sponge iron, billets, TMT bars and cast iron. Acuité believes that the long operational track record of Gagan group and promoters’ extensive understanding and expertise will support the group’s growth plans going forward. Moreover, the group has a locational advantage as the plants are located in the industrial area of Durgapur, West Bengal, which is in close proximity to various steel plants and sources of raw materials. Further the plants are well connected through road and rail transport which facilitates easy transportation of raw materials and finished goods.

Sustained improvement in operating performance and successful commissioning of integrated manufacturing facilities
Gagan Group’s revenue improved and stood at Rs. 2933.76 Cr in FY26(Prov.) as against Rs. 2651.40 Cr. in FY25 supported by sustained demand for its products and commencement of enhanced capacity from October 2025. Further, the group reported revenue of Rs. 962.50 Cr. in Q1FY27 as compared to Rs. 556.43 Cr. in Q1FY26. Further, the profitability of the group improved in FY26(Prov.) as reflected in the EBITDA margins which stood at 11.85 percent as against 8.16 percent in FY25 primarily driven by efficient cost management initiatives and the benefits accruing from the successful completion of the group's capital expenditure, which has enhanced operational efficiencies through its integrated manufacturing operations. Further, the group has reported EBITDA margin of 12.53 percent in Q1FY27. Consequently, the PAT margins also increased and stood at 4.96 percent in FY26(Prov.) as compared to 3.29 percent in FY25. Acuite believes that the group’s scale of operations and profitability margins are expected to improve steadily over the near to medium term, supported by cost savings arising from the commissioning of the captive power plant, improved operating efficiencies from the enhanced capacities, and the benefits of its integrated manufacturing operations. 

Healthy Financial Risk Profile
The financial risk profile of the group remained healthy marked by healthy net worth, low gearing and comfortable debt protection metrics. The tangible net worth of the group increased stood Rs. 1624.36 Cr. as on 31 March 2026 (Prov.) as against Rs. 1367.96 Cr. as on 31 March 2025 due to accretion of profits to reserves and infusion of funds by directors/promoters of ~Rs. 57 Cr. Acuite has considered unsecured loans to the tune of Rs. 292.05 Cr. as on March 31, 2026(prov.) as quasi equity as these loans are subordinated to bank debt. The gearing ratio (Debt/equity) of the group stood at 0.60 times in FY26 (Prov.) as compared to 0.66 times in FY25. The total outstanding debt of the group in FY26 (Prov.) comprises of long-term debt of Rs. 706.66 Cr., USL from directors/promoters of Rs. 43.79 Cr., CPLTD of Rs. 28.52 Cr. and Rs. 195.30 Cr. of short-term debt. The TOL/TNW stood at Rs. 0.86 times in FY26(Prov.) as against 0.88 times in FY25. The debt protection metrics remained comfortable with debt service coverage ratio (DSCR) of 3.04 times and interest service coverage ratio (ICR) stood at 4.17 times in FY26(Prov.). Acuite believes that the financial risk profile of Gagan group will remain healthy over the medium term due to steady accruals and absence of major debt funded capex.

Moderately intensive working capital operations  
The working capital operations of the group are moderately intensive, as reflected by Gross Current Assets (GCA) of 149 days in FY26(Prov.) as against 115 days in FY25. GCA days have increased in FY26 majorly on the account of higher inventory days and increased other current assets. The inventory days of the group increased to 83 days in FY26(Prov.) as against 60 days in FY25. Generally, the group maintains 2-2.5 months of inventory of iron ore and coal to mitigate the price volatility for which significant amount of advances is paid to the suppliers. The Creditor days of the group stood at 26 days in FY26(Prov.) as against 6 days in FY25. The group receives 25-30 days credit period from the suppliers. The debtor days stood at 22 days in FY26(Prov.) as compared to 17 days in FY25. The average bank limit utilisation at the consolidated level stood at 56.5 percent for fund-based facilities and 39.6 percent for non-fund facilities for six months ended May 2026. Acuite believes that the working capital operations of the group will remain at same level over the medium term owing to the nature of the business.

Vulnerability of profitability to the volatility in commodity prices in a cyclical nature of the industry
The group’s performance remains vulnerable to cyclicality in the steel sector as demand for steel depends on performance of end user segments such as construction and real estate. Indian steel sector is highly competitive due to presence of large number of players. The operating margin of the group is exposed to fluctuations in the prices of raw materials (coal and iron ore) as well as realization from finished goods.

- Sustain growth in revenues and profitability margins
- Improvement in working capital cycle with GCA below 70 days on a sustained basis
- Improvement in financial risk profile with debt to EBITDA below 1.5 times on a sustained basis

- Significant decline revenues and profitability
- Deterioration in financial risk profile on the back of unexpected debt funded capex or working capital borrowings with debt to equity above 1.5 times and DSCR below 2 times
- Elongation in working capital cycle