About PS Raj Steels Limited

Business Overview

PS Raj Steels Company is a prominent and fast-growing manufacturer and supplier of stainless-steel pipes and tubes in India. The product portfolio includes:

• Outer Diameter (OD) pipes ranging from ½ inch to 18 inches.
• Nominal Bore (NB) pipes ranging from 3/8 inch to 18 inches.
• Section pipes available in square, rectangular, and oval shapes.
• Slotted pipes.

With an extensive offering of over 250 standard sizes and the capability to provide customized solutions, the company stands among the manufacturers in India producing a diverse range of product sizes. Beyond core manufacturing operations, a significant portion of revenue is derived from trading stainless-steel coils & strips, sheets & plates, and bars. As of March 31, 2024, approximately 29.81% of revenue came from trading these products, while as of September 30, 2024, this segment contributed around 25.42% to the total revenue. The Comapny have employed a total of 114 permanent employees, as of January 31, 2025. The Banker to the Company is HDFC Bank Limited.

Industry Analysis

STEEL INDUSTRY
The three groups comprising the Indian steel industry are primary producers, secondary producers, and large producers. India is the second-largest producer of crude steel in the world, producing 121.29 MT of finished steel and 125.32 MT of crude steel in FY23. India is estimated to have produced 123–127 MT of steel in FY24, an increase of 4-7% y-o-y.

The availability of inexpensive labour and raw material such as iron ore domestically has been a key growth driver of the Indian steel industry. Consequently, steel contributes a significant part of India's manufacturing output.

The production of finished steel and crude steel was 114 MT and 118 MT, respectively, in FY24 until January 2024. India recorded finished steel consumption of 119.17 MT in FY23, compared to 105.75 MT in FY22. The country consumed 135.90 MT of finished steel in FY24. The per-capita consumption of steel stood at 86.7 kg in FY23.

Driven by brisk activity across steel-consuming industry sectors, steel companies are planning to resume their expansion projects with a capacity boost of 29 MT. With an increase in construction activity, the demand for steel was predicted to rise by 17% y-o-y to 110 MT in FY22. Tata Steel intends to build more scrap-based facilities with a minimum capacity of 1 billion tonnes by 2025, while by 2030, the company intends to increase its annual capacity in India from 34 MTPA to 55 MTPA.

The Indian government has implemented a number of initiatives to support the steel industry, such as the National Steel Policy 2017 and the automatic route which permits 100% foreign direct investment (FDI) in the steel sector. The Department for Promotion of Industry and Internal Trade (DPIIT) released data showing that FDI inflows of US$ 17.46 bn were attracted to the Indian metallurgical sector between April 2000 and December 2023. In July 2023, India overtook China as the leading country in developing coal-based steel capacity, as per the most recent report released by Global Energy Monitor (GEM).

The government mandates a minimum value addition of 15% for notified steel goods covered by preferential procurement, while it introduced the Steel Scrap Recycling Policy in 2019 with a goal of lowering imports. Since it allows for the recycling of materials used in outdated vehicles, the new Vehicle Scrappage policy will contribute to a decrease in steel costs.

Over the last ten to twelve years, India's steel industry has grown dramatically. Since 2008, domestic steel demand has climbed by over 80% while production has increased by 75%. Steel production capacity has increased in tandem with the growth in demand, which has mostly been organic.

The production of finished steel was 120.01 MT and that of crude steel was 133.60 MT in FY22. Finished steel production was 121.29 MT while 125.32 MT of crude steel was produced in FY23. The production of finished and crude steel was 138.5 MT and 143.6 MT, respectively, in FY24.

In FY22, 105.75 MT of finished steel was consumed in India. The amount of finished steel consumed in FY23 was 119.17 MT, while in FY24, finished steel consumption stood at 135.90 MT. In FY23, the per capita use of steel was 86.7 kg.

Finished steel import and export totalled 6.02 MT and 6.7 MT, respectively, in FY23. The quantity of finished steel imported and exported in FY24 was 8.32 MT and 7.49 MT, respectively. By 2030–31, the annual production of steel is projected to surpass 300 MT. With a 10% yield loss or a 90% conversion ratio for the conversion of raw steel to finished steel, crude steel production is set to reach 255 MT at 85% capacity utilisation, resulting in 230 MT of finished steel production by 2030–31. By 2030–31, with net exports of 24 MT, India’s steel production is anticipated to surpass consumption of 206 MT, pushing the percapita steel consumption up to 160 kg.

STAINLESS STEEL INDUDTRY
India is a significant player in the global stainless steel industry. It is the world's second-largest consumer. According to the Indian Stainless Steel Development Association (ISSDA), India's installed stainless steel capacity stood at around 7.5 million tonnes (MT) in March 2024.

The Indian stainless steel market was valued at US$ 17.45 bn in 2024 and is expected to grow to US$ 31.91 bn by 2034, representing a CAGR of 6.2%. India’s stainless steel consumption surged 11% from 4.02 mn tonnes in FY23 to 4.46 mn tonnes in FY24. India's per capita consumption of stainless steel remains significantly lower than the global average and that of developed and even certain emerging economies. In India, the per capita consumption of stainless steel is 3.1 kg, while the global average is ~6.5 kg per capita. This highlights the vast potential for stainless steel usage in the country. The low penetration of stainless steel presents great potential for future market expansion.

Business Strengths

1. Extensive & Customized Product Range
Offering a diverse selection of over 250 standard sizes of high-quality stainless-steel products, including Nominal Bore (NB) and Outer Diameter (OD) pipes, catering to various industrial applications. This broad product portfolio establishes the company as a comprehensive solution provider in the stainless-steel industry.

2. Cost-Effective Supply Chain
A strategic partnership with Jindal Stainless Limited (JSL) ensures a reliable supply of raw materials at a cost advantage. With JSL located approximately 25 km from the manufacturing plant, transportation costs are significantly minimized, leading to competitive pricing, reduced production costs, and increased profitability.

3. Strong Distribution and Customer Focus
An extensive distribution network spanning 18 states across India, along with direct engagement with OEMs, enables timely deliveries and customized solutions. This customer-centric approach strengthens long-term relationships and enhances market presence.

4. Experienced Promoters and Senior Management Team
The promoters, Mr. Raj Kumar Gupta, Mr. Deepak Kumar, Mr. Vishal Gupta, and Mr. Gaurav Gupta, collectively bring over five decades of industry experience, playing a key role in the company's growth since inception. A highly experienced senior management team, many of whom have been with the company for an extended period, ensures operational efficiency, business continuity, and the successful development of new systems and components.

5. Integrated Manufacturing Facility
A commitment to maintaining advanced infrastructure and continuous technological upgrades ensures efficient manufacturing processes and adaptability to evolving market demands. By staying at the forefront of technological advancements, the company remains competitive in a dynamic industry.

6. Stable Financial Position
Maintaining strong financial discipline, the company ensures timely payments to banks and creditors. Stringent financial policies, including periodic internal audits, help mitigate errors and uphold financial stability.

7. Quality Assurance and Standards
A strong focus on quality control ensures adherence to industry standards and customer specifications. Well-defined quality policies and rigorous inspections contribute to consistent product quality, leading to repeat business from clients who trust the company's ability to meet their standards.

8. Long Association with the Stainless-Steel Industry
Stainless steel is known for its high corrosion resistance, long life cycle, and eco-friendly nature, as it is 100% recyclable without leaching toxic chemicals. It offers exceptional fire and heat resistance due to its oxidation resistance at high temperatures. Additionally, stainless steel is maintenance-efficient, free from erosion and bacterial contamination, and widely recognized for its modern and aesthetically appealing appearance.

Business Strategies

1. Expansion of Domestic Market Presence
Finished goods under the brand name “PSSR” have been successfully delivered across 18 states in India. The company aims to continue diversifying and expanding its presence in these regions to drive business growth. Expansion into new locations is approached selectively, focusing on geographies where high-quality products can be delivered without significant delays or operational interruptions. By broadening geographic reach, the company mitigates risks associated with operating in limited regions and safeguards against fluctuations caused by business concentration.

2. Enhancing Core Strengths Through Skilled Workforce Development
Effective project execution and management are crucial for sustained success. Maintaining product quality, minimizing costs, and ensuring timely completion depend on the expertise and workmanship of employees. With increasing competition for skilled personnel in the Indian manufacturing sector, the company emphasizes staff training to enhance competitiveness. Engineering and technical personnel receive continuous training in the latest systems, techniques, and industry advancements, ensuring skill development and knowledge upgradation.

3. Improving Operational Efficiencies Through Technological Advancements
The manufacturing process is fully automated, with state-of-the-art equipment and machinery designed to meet customer requirements. In alignment with expansion plans, the company continues to invest in technological upgrades to enhance asset productivity, improve operational efficiencies, and strengthen its competitive position in the market.

4. Strengthening Brand Reputation
With approximately two decades in the stainless-steel pipes and tubes manufacturing industry, the company operates in a competitive landscape where many industry peers have an average operational history of 30 years. Brand development remains in an evolving stage, with ongoing efforts to establish a stronger market presence and industry goodwill.

Business Risk Factors and Concerns

1. Expected Decline in Trading Revenue for FY 2025
Sales from trading activities are projected to decline in FY 2025 due to reduced transactions with a group entity. Revenue is primarily generated through the sale of stainless-steel pipes and tubes, along with trading of raw materials such as stainless-steel coils and sheets. The share of trading revenue from group entities decreased from 55.70% as of March 31, 2024, to 39.18% as of September 30, 2024. This decline is attributed to a reduction in sales to Steelmint Industries Private Limited, which dropped from ₹4,938.01 lakh in FY 2024 to ₹1,385.28 lakh as of September 30, 2024.

2. Geographical Business Concentration and Influencing Factors
Operations are significantly concentrated in four states, with the manufacturing facility strategically located at V & P.O Talwandi Rukka, Hisar, Haryana-125001, India. This location provides logistical advantages, including ease of access to raw materials, power, and water supply, which are essential for smooth operations at Unit I. However, regional factors may impact business activities.

3. High Dependency on a Single Raw Material Supplier
Approximately 95% of raw material requirements are fulfilled by a single supplier, Jindal Stainless Limited (JSL). This high dependency creates operational risks, as any disruptions in JSL’s supply chain—due to financial instability, regulatory constraints, labor strikes, or operational inefficiencies—can significantly affect production levels, increase lead times, and potentially result in revenue loss.

4. Impact of Raw Material Price Fluctuations on Production Costs
Production costs are highly influenced by fluctuations in raw material prices, particularly HR coils and CR coils. The prices of stainless-steel sheets, CR coils, and HR coils are subject to significant volatility, driven by market conditions beyond direct control. Raw materials are primarily sourced from Jindal Stainless Limited (JSL) without a long-term supply agreement, though a Memorandum of Understanding (MoU) renewed on April 1, 2024, offers price protection against market fluctuations. Despite this arrangement, exposure to increased costs remains a potential risk if any disruptions affect the terms of the MoU.

PS Raj Steels Company faces key business challenges, including a projected decline in trading revenue due to reduced sales to a group entity, a concentrated geographical presence, and heavy reliance on a single raw material supplier, Jindal Stainless Limited. Additionally, fluctuating raw material prices pose a significant risk to production costs. While strategic advantages such as location benefits and price protection agreements help mitigate some risks, the company remains exposed to supply chain disruptions and market volatility.