Business Profile of the A-One Steels India Limited
A-One Steels India is a backward integrated steel manufacturer in southern India. The company produces a diverse product portfolio of long and flat steel products and industrial products. They are one of the top five steel producers in India in terms of crude steel capacity and have a 1% share in the domestic pipe market. The company sources significant amounts of green energy, with TMT bars certified as green products by the CII. They have six manufacturing facilities, with five in Karnataka and one in Andhra Pradesh.
The company's sales are primarily concentrated in the states of Karnataka, Andhra Pradesh, Tamil Nadu, Maharashtra, and Telangana, which are closer to its facilities. The company uses advanced alloying techniques and continuous casting processes to enhance the mechanical properties of its products, including TMT bars. They use German technology Thermex for production and use the induction furnace route/EAF for steel production, providing flexibility and insulating from short supplies.
A-One Steels India Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to XXXX Equity Shares aggregating up to Rs. 5, 000 lakh. Nothing from those proceeds of OFS will be allotted to company.
- A-One Steels India IPO offer only has fresh issue of Rs. 60, 000 lakh. As per DRHP document, the company aims to utilize IPO proceedings towards investment in subsidiary for purchase of machinery, investment in subsidiary, payment of certain borrowings and general expenses.
| Particulars | Total estimated expenditure |
| Investment in Indian Subsidiary for purchase of equipment and civil works for expansion of facility | 34437 |
| Equity Investment in Indian subsidiary of the Company, Vanya Steels Private Limited for investment in Group Captive power for procurement of Solar energy | 4000 |
| Payment of a portion of certain outstanding borrowings availed by company | 10000 |
| General corporate purposes | XXXX |
(₹ lakhs)
IPO Details of A-One Steels India Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹10 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to XXXX Equity Shares |
| Aggregating up to ₹ XXXX million. | |
| Fresh Issue | Up to XXXX Equity Shares |
| Aggregating up to ₹ 60,000 lakh | |
| Offer For Sale | Up to XXXX Equity Shares |
| Aggregating up to ₹ 5,000 lakh | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not more than 30% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: A-One Steels India Limited IPO
The issue price of A-One Steels India Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 600 crores as well as offer for sale of Rs. 50 crores.
Launch Date of A-One Steels India Limited IPO
The IPO opening date of A-One Steels India hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
A-One Steels India Limited Financial Statements
| Particulars | For 3-Mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| Income | ||||
| Revenue from operations | 95460.78 | 383421.3 | 316351.9 | 275693.6 |
| Other income | 696.57 | 2822.61 | 2075.23 | 436.25 |
| Total Income | 96157.35 | 386243.9 | 318427.2 | 276119.9 |
| Expenses | ||||
| Cost of materials consumed | 82016.61 | 339451.3 | 279901.3 | 240283.1 |
| Changes in inventories of finished goods and by products | -2282.36 | -9228.94 | -9985.59 | -4838.48 |
| Employee benefit expense | 1105.24 | 4082.17 | 3131.89 | 2351.46 |
| Finance costs | 2663.81 | 9729.84 | 7069.7 | 3050.35 |
| Depreciation and amortisation expense | 1270.79 | 4321.76 | 3173.23 | 1903.83 |
| Other expenses | 8490.94 | 32069.79 | 21553.38 | 19902.22 |
| Total Expenses | 93265.03 | 380425.9 | 304943.9 | 262652.4 |
| Profit before tax | 2448.63 | 5817.93 | 13483.27 | 13467.45 |
| Profit for the period | 1618.25 | 3891.37 | 9769.66 | 10065.03 |
| Particulars | For 3-Mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| Revenue from operations | 95460.78 | 383421.3 | 316351.9 | 275683.6 |
| Total Income | 96157.35 | 386243.9 | 318.427.15 | 276119.9 |
| EBITDA | 6383.23 | 19869.53 | 23826.22 | 18421.62 |
| EBITDA Margin | 6.69% | 5.18% | 7.53% | 6.68% |
| PAT | 1618.25 | 3891.37 | 9769.48 | 10065.02 |
| PAT Margin | 1.70% | 1.01% | 3.09% | 3.65% |
| Operating cash flow | -9656.05 | 32539.77 | -31950.2 | -5192.54 |
| Net worth | 60526.86 | 42643.69 | 36258.38 | 26470.49 |
| Net Debt | 102660.11 | 99278.97 | 105452.5 | 41866.09 |
| Debt Equity Ratio | 1.76 | 2.34 | 2.96 | 1.62 |
| ROCE % | 2.97 | 10.45 | 13.64 | 22.23 |
| ROE % | 3.03 | 9.42 | 29.42 | 47.89 |
A-One Steels India Limited Promoters & Shareholding
As of date, there are three promoters of the company.
The promoter along with promoter group in aggregate collectively holds 85.86% of the paid-up share capital of company.
| Name of the Shareholder | No. of Equity Shares held | % of the Equity Share capital | Selling shareholder |
| Promoter | |||
| Sandeep Kumar* | 2,24,66,430 | 32.81 | aggregating up to ₹ 2,000 lakhs |
| Sunil Jallan | 2,07,37,640 | 30.29 | aggregating up to ₹ 2,000 lakhs |
| Krishan Kumar Jalan | 1,53,76,200 | 22.46 | aggregating up to ₹ 1,000 lakhs |
| Total | 5,85,80,270 | 85.56 | |
| Promoter Group | |||
| Daya Jallan | 1,34,000 | 0.2 | |
| Santosh | 30,000 | 0.04 | |
| Quality Stone and Steels | 40,000 | 0.06 | |
| Total | 2,04,000 | 0.3 | |
| Grand Total | 5,87,84,270 | 85.86 | |
Should You Subscribe to A-One Steels India Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of A-One Steels India Limited:
Largest backward integrated steel products manufacturers in southern India
A backward integrated steel manufacturer in southern India has a diverse product portfolio, including long and flat steel products and industrial products. As one of the top five steel producers in southern India, they have grown from two products in 2012 to 10 steel and industrial products. They manufacture sponge iron, MS billets, TMT, HR coils, HR pipes, GP pipes, CR pipes, and more. Their manufacturing facilities are flexible, allowing them to offer a diverse range of products and services. They have also acquired plants of financially distressed companies, such as Bellary plant I, Koppal plant, Trivista steel plant, and Chikkanttapur plant. These acquisitions have increased production capacity and operational efficiency.
| Particulars | For 3-Mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| % of revenue from operations | ||||
| Pipes & Tubes | 21.77 | 18.92 | 16.54 | 19.83 |
| TMT Bar | 32.12 | 29.18 | 30.3 | 26.94 |
| Sponge Iron | 12.96 | 12.74 | 14.23 | 18.54 |
Strategically located facilities
A-One manufacturing facilities are strategically located near our raw material sources, allowing them to access raw materials, side by side lower transportation costs, and improve operational margins. They source from major suppliers like, JSW International Tradecorp PTE Ltd, MGK International DWC LLC, Adani Enterprises Ltd., JSW Minerals Trading Pvt. Ltd., and Adani Global Pte. Ltd. The facilities are well connected by roads and railways, supporting logistics infrastructure. This minimizes transportation costs and logistics complexities, enhancing cost efficiency and maintaining competitive pricing while ensuring timely delivery to our valued customers.
Widespread distribution network
The company distributes its products through an established supply chain, including 80+ authorized distributors, 700+ direct retail sales channels, and 35+ institutional customers. The number of direct retail sales channels increased from 886 in FY22 to 1,222 in FY24. The company's manufacturing facilities are well-connected with distributors and direct retail sales channels. The sales and marketing team, consisting of 59 employees, is monitored through Lighthouse ERP software. A CRM system streamlines sales processes and improves lead management. The company participates in industry conferences and trade shows to showcase products and showcase technological advancements.
| Particulars | For 3-Mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| Distributors | 82 | 87 | 68 | 36 |
| direct retail sales channels | 748 | 1222 | 907 | 886 |
| Institutional customers | 36 | 45 | 36 | 34 |
Use of green energy in manufacturing
A-One Gold, a popular pipe and structural steel manufacturer in southern India, has developed a strong brand recall through high-quality, innovative products. The company has focused on innovation, quality standards, and technology integration to add value to consumers. A-One Gold is leading in the use of green energy for steel production, sourcing power under long-term power purchase agreements under group captive basis. The company has also been certified as green products by the CII Green Products and Services Council, demonstrating adherence to sustainable manufacturing practices and aligning with eco-friendly standards.
Future strategies
- Introduce new products to tap into rapidly growing automotive, infrastructure, engineering, and consumer sectors.
- Optimize and upgrade existing facilities and expand production capacity
- Expand its customer base, increase business share amongst existing customers, and expand to different geographies.
- Improve existing products and increase the number of products manufactured for each customer.
- Develop backward integration capabilities and become a comprehensive engineering solutions provider.
- Grow its revenue from exports and focus on sales in international markets.
- Acquire financially distressed companies within the steel and related industries
Risk Factors of A-One Steels India Limited:
Capacity under-utilization
DRHP outlines six manufacturing facilities, five in Karnataka and one in Andhra Pradesh. These facilities are located in Gowribidanur, Bellary, Koppal, Chikanttapur, and Hindupur. The company's profitability relies on capacity utilization, which is affected by factors like product mix, customer demand forecasting, uninterrupted operations, industry conditions, overhead costs, and manufacturing costs. If demand declines or increase in competition or disruptions occur due to essential material shortage, labor unrest, or insufficient raw materials, the company may struggle to achieve full capacity utilization, leading to operational inefficiencies that could negatively impact the business fundamentals and financial condition.
Capacity expansion
The company has increased its installed capacities from 0.97 million MTPA in FY22 to 1.47 million MTPA in FY24. They are expanding their Koppal Facility by setting up a 0.3 million MTPA iron ore beneficiation plant and a 10 MW power plant with a waste heat recovery boiler. They also plan to manufacture MS bars, SS rods, and pipes at the new facility. However, the expansion faces risks, including timely completion, regulatory approvals, decline in product demand, and economic conditions. Future growth depends on increasing manufacturing capacity cost-effectively and efficiently. Factors affecting the completion of the expansion include raising additional funds, delays, cost overruns, government approvals, and resource allocation. The company's expansion plans may be subject to change due to factors beyond its control.
Also, their manufacturing facilities are susceptible to operating risks such as equipment breakdowns, disasters, industrial accidents, and government directives. Unscheduled or prolonged disruptions could reduce our ability to meet contract conditions and adversely affect sales and revenues. Any interruption in production may require significant capital expenditure, negatively impacting profitability and cash flows.
Reduction in duties
China is among the top producer of steel and related product. Taking into consideration China’s large capacity and changes in India’s import duties can play important role in supporting domestic steel industry. The company's sales may be affected by fluctuations in steel import duties due to increased competition, potentially reducing market share and margins. Additionally, reduced import duties and lower prices from countries benefiting from bilateral or multilateral trade agreements with India could negatively impact the company's operations and financial condition.
Affect by slowdown in key industries
The business's operations can be adversely affected by any slowdown in key industries or significant reduction in business volume with customers operating in such industries. Demand in these industries is sensitive to factors such as national and international trade, changes in government policies, regulations, commodity prices, and oil prices also affect demand. A decline in customers' business performance may lead to a decrease in demand for products and services.
A sustained decline in demand could prompt customers to cut production volumes, directly affecting our products. Unfavorable industry conditions can also increase commercial disputes and supply disruption risks.
Imbedded Volatility
Steel production requires significant amounts of raw materials and energy, which are subject to significant price volatility. The industry is capital-intensive, with high fixed costs to total costs. Steel prices fluctuate due to factors like raw material input availability, domestic and international demand, production capacity, steel import volume, protective trade measures and political trends. Downturns in sectors like reality, infrastructure spending can lead to decreased demand for steel products, resulting in lower prices and adverse effects on businesses prospects.
A-One Steels India Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the A-One Steels India Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
