Key rating drivers and detailed description

Strengths:

Extensive experience of the promoters in the steel industry:

VIL’s key promoters, Mr Ravi Vaswani and Mr Yashwant Vaswani, have experience of more than three decades in the iron and steel industry, which has helped the company establish healthy relationships with customers and suppliers. The promoters have strategically invested in backward integration over the years and increased the capacity. The backward integration is expected to result in better operating efficiencies. The extensive experience of the promoters has helped the company sustain many industry down cycles.

Strong financial risk profile:

VIL’s financial profile is strong, as reflected in healthy networth of Rs 105 crore as on March 31, 2023. The debt protection metrics are also moderately healthy with interest coverage and net cash accrual to total debt (NCATD) ratios of 2.6 times and 0.27 time, respectively, in fiscal 2023. The gearing is 0.34 time as on March 31, 2023 and is expected to remain healthy in the absence of any debt-funded capital expenditure (capex).

Weakness:

Susceptibility to intense competition in the steel industry

The domestic steel industry is highly fragmented, with several small players entering the business because of low capital requirement. Furthermore, with large, integrated players increasing capacity, the pricing power of secondary steel producers, such as VIL, in the long product segment, should remain limited.

Key Financial Indicators

Annexure - Details of Instrument(s)

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