**SAL Steel Limited** is an integrated Indian manufacturer of industrial raw materials, primarily serving the iron and steel sectors. The company operates a strategic manufacturing hub in Gujarat, leveraging captive power generation to maintain a competitive cost structure. As of **2025-2026**, the company is undergoing a transformative change in corporate control and management, shifting from the **Shah Alloys Group** to **Sree Metaliks Limited**. --- ### **Strategic Ownership Transition & Management Overhaul** The company is currently executing a comprehensive change in management and control following a successful **Open Offer** and acquisition process. * **New Promoter Control:** **Sree Metaliks Limited** (the Acquirer) is assuming the role of 'Promoter,' while the previous group (including **Shah Alloys Limited**) will be reclassified as 'Public.' * **Equity Infusion:** To facilitate this transition, the company executed a **Preferential Allotment** of **1,92,50,000 equity shares** and **3,57,50,000 warrants** to Sree Metaliks Ltd at **₹18 per unit**. * **Warrant Conversion:** In **February 2026**, the conversion of all **3,57,50,000 warrants** was approved following the receipt of the remaining **75%** subscription amount (**₹13.50 per warrant**). * **Projected Shareholding:** Upon completion of the Share Purchase Agreement (SPA) and Open Offer (priced at **₹25 per share**), the Acquirer’s stake is projected to reach **70.98%**, with a potential peak of **96.98%** depending on public acceptance. * **Leadership:** **Shri Mahesh Kumar Agarwal** has been appointed as **Managing Director and Chairperson** for a 3-year term effective **December 23, 2025**, signaling a new era of operational strategy. --- ### **Integrated Manufacturing & Operational Infrastructure** The company’s core operations are centralized at its facility in **Village Bharapar, Gandhidham, Kutch, Gujarat**. * **Captive Power Advantage:** The site features a **40 MW** power plant utilizing **Waste Heat Recovery Boilers (WHRB)** and **Fluidized Bed Combustion (FBC)**. This integration allows the company to recycle waste heat from manufacturing into electricity, significantly lowering the cost per unit of production. * **Grid Connectivity:** The power plant operates in parallel with the **GETCO Grid**, allowing for the sale of surplus power. * **Production Segments:** * **Sponge Iron (DRI):** The primary revenue driver. * **Ferro Alloys:** Specifically **Ferro Chrome**. * **Iron Ore Pellets:** A focus area for future backward integration. #### **Production & Sales Volume Trends** | Product / Metric | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :--- | :--- | :--- | | **Sponge Iron Production (MT)** | **1,31,281** | **1,29,696** | **1,12,563** | | **Sponge Iron Sales (MT)** | **1,31,619** | **1,28,115** | **1,13,365** | | **Ferro Chrome Production (MT)** | **12,916** | **14,797** | **8,932** | | **Ferro Chrome Sales (MT)** | **12,444** | **14,759** | **8,916** | --- ### **Financial Performance & Capital Structure** The company has recently restructured its balance sheet, settling historical liabilities with Asset Reconstruction Companies (ARCs) as of **September 2023**. #### **Key Financial Metrics** | Financial Year | Total Revenue (₹ Cr) | Domestic Revenue (₹ Cr) | Export Revenue (₹ Cr) | PBT (₹ Cr) | | :--- | :--- | :--- | :--- | :--- | | **2024-25** | **544.98** | **544.11** | **Nil** | **(3.15)** | | **2023-24** | **578.23** | **568.88** | **7.75** | **0.64** | | **2022-23** | **510.13** | **487.64** | **8.08** | **5.52** | * **Capital Expansion:** The **Authorized Share Capital** was increased to **₹145 Crores** to accommodate new issuances. The **Expanded Share Capital** stands at **₹144.77 Crores** (14.48 crore shares) as of **February 2026**. * **Liquidity & Credit:** In **March 2026**, the company secured a **₹150 Crore** working capital facility from **YES Bank Limited**, secured by a mortgage on the Gandhidham property. This follows a **₹50 Crore** facility from **Kotak Mahindra Bank** in late 2024. * **Borrowing Limits:** The Board has approved borrowing limits up to **₹2,000 Crores** to support future debt requirements and expansion. --- ### **Growth Strategy & Market Outlook** Under the new promoter group, SAL Steel is pivoting toward capacity enhancement and vertical integration. * **Backward Integration:** A primary strategic goal is the establishment of a **Pellet Plant Facility** to reduce reliance on external raw material suppliers and stabilize margins. * **Asset Modernization:** Capital is being deployed to refurbish and upgrade **furnace facilities** to improve energy efficiency and product quality. * **Macro Alignment:** The company’s expansion aligns with the **National Steel Policy 2017**, which targets **300 MT** of steel capacity by **2030-31**. Specifically, the policy expects sponge iron to contribute **80 MT**, positioning SAL Steel in a high-growth segment. * **Infrastructure Tailwinds:** Demand is bolstered by the Indian government’s **₹75,000 crore** allocation for transport infrastructure and the **PLI Scheme** for specialty steel. --- ### **Risk Factors & Regulatory Compliance** Investors should note several critical risks related to historical compliance and financial reporting. #### **1. Regulatory & Listing Risks** * **Minimum Public Shareholding (MPS):** Following the acquisition, promoter holding may reach **96.98%**. The company must comply with **SEBI (SAST) Regulation 7(4)** to restore the public float to the mandatory **25%**. * **Non-Compliance History:** The company has faced penalties from **BSE** and **NSE** for failing to maintain the required number of directors (minimum 6) during **FY 2024-25**. * **Demat Freezing:** Exchanges have issued reminders to **freeze promoter demat accounts** due to unpaid fines and non-compliance with **Regulation 76**. #### **2. Financial & Audit Qualifications** * **Unprovided Liabilities:** Auditors qualified the **FY 2024-25** results, noting that the company failed to provide for **Electricity Duty (₹3.14 Cr)** and **Impairment of Capital Work in Progress (₹1.01 Cr)**. Had these been recorded, losses would have been significantly higher. * **Statutory Dues:** There are undisputed outstanding dues for **VAT (₹16.07 Cr)** and **Deferred Sales Tax (₹1.36 Cr)** exceeding six months. * **Litigation:** A major contingent liability involves a **Supreme Court appeal** regarding **Input Tax Credit (ITC)** on non-coking coal. #### **3. Operational & Concentration Risks** * **Customer Concentration:** In **FY 2023-24**, two customers accounted for over **10%** of revenue each, totaling **₹457.08 Crore** (including GST). * **Related Party Transactions:** The company maintains a significant relationship with **Shah Alloys Limited (SAL)**, with a three-year agreement (through FY 2026-27) allowing for sales up to **₹500 Cr** and purchases up to **₹200 Cr** annually. * **Input Volatility:** Dependence on imported coal exposes the company to **USD-INR exchange rate** fluctuations and global commodity price cycles. * **Asset Protection:** Historically, the company has **not availed insurance** for its fixed assets, representing a significant risk in the event of industrial accidents.