Experienced management and integrated operations
Incorporated in 1992, VAPL is promoted by Mr. Sagar Mal Jain, Mr. Pradeep Kimtee, Mr. Abhay Porwal, Mr. Komal Singh Duggad and their respective families. The promoters have over three decades of experience in the iron & steel manufacturing business in India. The company benefits from the rich experience of its promoters, which is reflected by its long standing relations with both customers and suppliers. Prior to FY2021, the Company was engaged in manufacturing of ingot and billets. It forward integrated its operations and began manufacturing of TMT bars by end of FY2021. The operating income of the company stood at Rs.570.42 crore in FY2023(prov.) as against Rs.564.09 crore in FY2022. The operating profit margin of the company remained range bound and stood at 3.77% in FY2023(prov.) as against 3.76% in FY2022.

Acuité believes VAPL will continue to benefit over the medium term from its experienced management and its long track record of operations.

­Moderate Financial risk profile
The financial risk profile of the company is moderate marked by moderate net worth, low gearing level and moderate debt-protection metrics. The tangible net worth of the company stood at Rs.47.27 crore as on March 31, 2023(prov.) as against Rs.38.46 crore as on March 31, 2022. The overall gearing stood at  1.10 times as on March 31, 2023(prov.) as against 1.38 times as on March 31, 2022. The total outside liabilities to total networth(TOL/TNW) stood at 1.57 times as on March 31, 2023(prov.) as against 1.98 times as on March 31, 2022.The debt-protection metrics are moderate with interest coverage ratio (ICR) of 4.77 times for FY2023(prov.) as against 5.19 times for FY2022. The debt-service coverage ratio (DSCR) stood at 1.87 times for FY2023(prov.) as against 1.86 times for FY2022.

Acuite believes that the financial risk profile of VAPL will continue to remain moderate on account of absence of any debt funded capex plan.

Efficient Working capital management
The working capital operations of the company are efficiently managed marked by low GCA days.. The inventory days stood at 42 days in FY2023(prov.) as against 31 days in FY2022. The debtor days stood at 10 days in FY2023(prov.) as against 13 days in FY2022. The creditor days stood at 13 days in FY2023(prov.) as against 14 days in FY2022. The average working capital utilisation of the company stood at 62.40% for last thirteen months ended as on April 2023.

­Thin profitability margins
The operating profit margin of the company remained range bound and stood at 3.77% in FY2023(prov.) as against 3.76% in FY2022. The profit after tax (PAT) margin stood at 1.54% in FY2023(prov.) as against 1.53% in FY2022.The Company's profitability is susceptible to fluctuations in raw material prices, though the order back-to-back policy of the Company hedges the margins to an extent.

Acuite believes that VAPL's ability to maintain its profitability will remain a key monitorable.

Inherent cyclicality in the steel industry
The steel industry is highly fragmented and unorganized. VAPL is exposed to intense competitive pressure from large number of organized and unorganized players along with its exposure to inherent cyclical nature of the steel industry.