About Sambhav Steel Tubes Limited

BUSINESS OVERVIEW

Sambhav Steel Tubes is one of the key manufacturers of electric resistance welded (ERW) steel pipes and structural tubes (hollow sections) in India, ranked by installed capacity as of March 31, 2024 (Source: CRISIL Report). It is the only company in India with a single-location backward-integrated facility for ERW pipes and tubes, covering the entire value chain—from sponge iron to HR coils and finished steel products.

The company is one of only two players in India producing ERW pipes using narrow-width hot rolled (HR) coils, and the only one with backward integration capability for narrow-width HR coil production (Source: CRISIL Report). The product portfolio includes ERW black pipes, hollow sections, and galvanized iron (GI) pipes, known for rust resistance and application across sectors such as housing, infrastructure, water transportation, agriculture, oil & gas, telecom, solar, engineering, and firefighting systems.

Manufacturing operations are based in Sarora (Tilda), Raipur, Chhattisgarh, with strategic proximity to high-grade iron ore and coal suppliers, including a “Navratna” PSU for iron ore and a “Maharatna” PSU for coal, the latter supplying from Asia’s largest coal mines located just 250 km away. A long-term coal supply agreement ensures uninterrupted operations.

The facility features advanced technology, including a hot rolling mill with hydraulic automatic gauge control (HAGC) for precision HR coil production, comparable to primary coil manufacturers. As of FY25, the company plans to expand into GP coils, pre-galvanized pipes, CRFH pipes, stainless steel HRAP coils, and CR coils.

A 25 MW captive power plant (16 MW WHRB + 9 MW AFBC) supports production with sustainable energy. As of March 31, 2024, the company operates through 39 distributor branches across 15 states and one union territory, reaching over 600 dealers nationwide. The strong distribution network ensures significant market outreach, especially in Chhattisgarh, Maharashtra, Gujarat, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, and Telangana. As per CRISIL, Sambhav Steel Tubes held approximately 2.00% market share in India’s domestic ERW pipes segment by sales volume in FY24.

As of March 31, 2025 the Company had 1,774 permanent employees.The Bankers to the Company are State Bank of India, Axis Bank Limited, Kotak Mahindra Bank Limited, Yes Bank Limited, HDFC Bank Limited, Union Bank of India and Federal Bank Limited.

INDUSTRY ANALYSIS

Indian Steel Industry Overview

India’s Global Position

Between 2014 and 2023, global crude steel production grew at a modest CAGR of ~1.4%, remaining largely range-bound—rising from 1,878 million tonnes in 2019 to 1,892 million tonnes in 2023. China retained its dominance with 1,019 million tonnes of crude steel production in 2023, representing ~54% of global output. India ranked second globally with approximately 140 million tonnes, contributing around 7.4% to global production.

Global steel demand remained flat in 2023 at 1,763 million tonnes, largely due to elevated inflation and high interest rates in major economies. In contrast, India witnessed robust domestic growth, with finished steel consumption increasing by 13–14% in FY24 to 136.2 million tonnes—driven by strong momentum in the construction and infrastructure sectors.

Despite India's growing output, its per capita steel consumption stood at just 98 kg in FY24, significantly below the global average of 219 kg. However, this highlights substantial untapped potential, especially with increased focus on infrastructure development. Comparatively, countries like the US, Russia, Japan, and China exhibit higher steel intensity due to greater investment in infrastructure.

Following pandemic-related disruptions in 2020, steel demand in India rebounded strongly in 2021 and beyond, outpacing many major economies. While China’s steel consumption grew during the pandemic due to a swift economic recovery and stimulus measures, India experienced strong pent-up demand post-COVID.

Correlation with GDP Growth

India’s steel demand has consistently outpaced GDP growth from FY18 to FY23, except during FY20 and FY21—years impacted by economic slowdown and nationwide lockdowns. In FY23, the steel demand-to-GDP growth ratio peaked at 1.9, before moderating slightly to 1.8 in FY24—still above pre-pandemic levels.

The Indian steel industry posted a healthy 6–7% CAGR between FY19 and FY24, reaching 136.2 million tonnes in FY24, supported by growth in key consuming sectors such as automobiles, construction, and infrastructure. Per capita steel consumption is expected to rise to 158 kg by FY30, reflecting continued structural growth and policy support.

Indian Steel Pipes Industry Overview

Steel pipes, as critical downstream products, are primarily used for transporting water, gas, and oil, and serve various applications in the construction sector. The domestic steel pipes and tubes market is highly fragmented, with over 100 manufacturers operating across the country.

Future demand for steel pipes is projected to reach 18.5–20.5 million tonnes per annum (MTPA) by FY29, growing at a CAGR of 8–9% between FY25 and FY29. This growth is expected to be led by the infrastructure and irrigation segments, which will continue to account for 50–55% of total demand.

Further demand acceleration is anticipated through substitution of traditional materials like concrete and conventional steel. Tubular steel, which is 10–20% lighter, is increasingly being preferred in government infrastructure initiatives. For instance, under the Amrit Bharat Station Scheme, aimed at redeveloping 1,275 railway stations, structures like foot-over bridges and ceilings are planned to be constructed entirely with steel pipes and tubes. This could translate into 500–3,000 tonnes of steel pipes per station, creating a significant market opportunity.

In addition, new airports, high-rise buildings, warehouses, data centers, water tanks, and hospitals are expected to further drive demand for steel tubes, solidifying their role as a modern construction material.

BUSINESS STRENGTHS

1. Only Single-Location Backward Integrated ERW Pipe Manufacturer in India
The company operates India’s only single-location backward integrated manufacturing facility for ERW steel pipes and tubes (Source: CRISIL Report). Operations include in-house production of sponge iron, mild steel blooms/slabs, and HR coils, primarily for captive use in manufacturing ERW black pipes, hollow sections, GI pipes, and steel door frames. Recently, stainless steel blooms/slabs and HR coils have been added to the product mix.

2. Strategically Located Manufacturing for Supply Chain Efficiency
The Sarora (Tilda) facility is spread over 334,540 sq. meters in mineral-rich Chhattisgarh, ensuring proximity to key raw material sources. Iron ore is sourced from a Navratna PSU, known for India’s highest grade ore (DRCLO), while coal is secured via a long-term agreement with a Maharatna PSU, India's largest coal producer. This results in logistics optimization and uninterrupted supply chain.

3. Strong Product Development and Expansion Capabilities
Since inception in 2018 with sponge iron production, the company has progressively expanded into value-added and customized steel pipes and tubes, demonstrating robust process innovation and execution strength.

4. Extensive Distribution Network Across India
As of March 31, 2024, the company has 39 distributor branches across 15 states and 1 union territory, reaching over 600 dealers. This wide network supports distribution to retailers, fabricators, infrastructure firms, and government projects, with significant presence in Chhattisgarh, Maharashtra, Gujarat, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, and Telangana.

5. Positioned to Leverage Growing Demand
Rising demand from sectors like water supply, irrigation, sanitation, and flood control, driven by government schemes such as Jal Jeevan Mission and Har Ghar Nal Yojana, offers a strong growth outlook for ERW steel pipes and tubes (Source: CRISIL Report).

6. Experienced Promoters and Leadership
Led by Brijlal Goyal, Suresh Kumar Goyal, and Vikas Kumar Goyal, the promoter group brings over 20 years of average industry experience. Suresh Kumar Goyal was recognized with the Times Most Powerful Leader award (2022), while Vikas Kumar Goyal was honored with Brand Story’s 40 Under 40 Young Leader award (2024) for driving strategic growth and operational excellence.

7. Robust Financial Performance
Revenue from operations rose from ₹8,193.49 million in FY22 to ₹12,857.57 million in FY24. Restated profit grew from ₹721.08 million to ₹824.39 million, while total equity increased from ₹1,492.97 million to ₹4,382.82 million over the same period. Strategic cost management and operational efficiency have driven consistent margin improvements.

BUSINESS STRATEGIES

1. Significant Capacity Expansion Focused on Value-Added Products
The Sarora (Tilda) Facility in Raipur, Chhattisgarh, spans approximately 334,540 sq. meters, with installed capacity expanding from 1.12 million MTPA (as of March 31, 2024) to 1.54 million MTPA (as of September 20, 2024). The expansion aims to support the production of value-added products including SS HRAP coils, SS CR coils, CRFH pipes, GP coils, and GP pipes.

2. Distributor Network Expansion and Deepening Market Penetration
Expansion efforts include broadening distributor presence across new geographies and increasing business share from existing distributors and direct customers, supported by rising production volumes.

3. Emphasis on Product Customization and Development
Continuous focus on developing customized, value-added steel products tailored to customer needs. New offerings target diverse end-use sectors such as telecommunications, construction, water systems, fire safety, and infrastructure, improving dimensional accuracy and surface finish.

4. Operational and Cost Efficiency Initiatives
Operational efficiency is driven by advanced machinery, automated processes, captive power plant (25 MW), and energy cost reduction measures. These include a long-term solar Energy Supply Agreement (ESA) under the group captive model and a dedicated 132 kVA power line. Additionally, adoption of zinc-efficient technology for GP products further enhances cost control without compromising quality.

5. Focused Brand Building and Market Visibility
Brand visibility is strengthened through a multi-channel marketing strategy across digital, print, and electronic media. Engagement initiatives include dealer meets (e.g., Singapore, June 2024), fabricator interactions through “Chai pe Charcha”, and collaborations with architects, contractors, and traders to align with industry trends and foster strong relationships.

BUSINESS RISK FACTORS & CONCERNS

1. Dependence on Key Raw Material Suppliers Without Definitive Agreements
Raw material procurement is dependent on select suppliers, including a Navratna PSU for iron ore, and companies like Godawari Power & Ispat, Sarda Energy, Shyam Metalics, Adani Enterprises, and Agarwal Coal Corporation. The absence of long-term agreements with most suppliers exposes the business to risks related to supply disruptions and price volatility, potentially affecting margins, cash flows, and profitability.

2. Volatility in Raw Material Prices and Limited Pricing Flexibility
Fluctuations in prices of iron ore, coal, sponge iron, and steel scrap may impact operational margins if cost increases cannot be passed on to customers. This could adversely affect financial performance.

3. Revenue Concentration in Limited Product Categories
A significant portion of revenue is generated from ERW black pipes and tubes and GI pipes. Any shift in customer preferences, emergence of substitutes, or changes in production technology could adversely impact demand, sales, and profitability.

4. Geographic Revenue Concentration in North and West India
Sales are primarily concentrated in north and west India, as of March 31, 2024. Any regional economic or policy disruptions could significantly impact revenues, and limited geographic diversification may constrain growth.

5. Competitive Industry Landscape
Faces strong competition from established players such as APL Apollo Tubes, Hariom Pipe Industries, Hi-Tech Pipes, Rama Steel Tubes, JTL Industries, and Surya Roshni. Intense competition may lead to market share loss and pricing pressure, impacting growth and financial performance.

India ranks as the second-largest crude steel producer, with strong domestic demand driven by infrastructure and construction. The steel pipes industry is projected to grow at 8–9% CAGR till FY29, supported by government projects and material substitution trends.