Steel Exchange India Limited (SEIL), a prominent player in India’s steel manufacturing sector, has announced that it has secured a major conversion contract from public sector company Rashtriya Ispat Nigam Limited (RINL), the producer of the popular Vizag Steel brand. This development marks a significant boost to SEIL’s operational footprint, revenue potential, and capacity utilisation at a critical time for the domestic steel industry.

According to the company’s official stock exchange filing on July 21, 2025, the conversion contract entails transforming 1.20 lakh tonnes per annum of billets into various sizes of TMT rebars under the Vizag Steel brand. The conversion work will be undertaken at SEIL’s state-of-the-art new rolling mill located in Sreerampuram, Vizianagaram District, Andhra Pradesh.

The contract is valid for a period of two years, with the provision to extend it by one more year upon mutual consent, making the total potential tenure up to three years. The estimated commercial value of the deal stands at ₹210 crore over three years, translating to approximately ₹70 crore per annum.

Major Win from a Maharatna PSU

RINL, also known as Vizag Steel, is a major central public sector enterprise under the Ministry of Steel, and this contract win is a testament to SEIL’s operational capabilities, compliance standards, and strategic relevance within the Indian steel value chain.

The conversion contract is of strategic significance, as it allows RINL to outsource part of its billet processing to a reliable private partner, while enabling SEIL to fully leverage its rolling mill capacity. This aligns with RINL’s broader strategy to improve efficiency and reduce internal bottlenecks amid evolving market dynamics.

“We are pleased to inform that the company has been successfully awarded the conversion contract in recent bid from RINL… This conversion work will be carried out from the company’s existing new rolling mill, which will ensure better capacity utilization and increased revenues,” said Mr. Raveendra Babu M, Company Secretary of SEIL.

Financial and Operational Impact

The ₹210 crore contract is expected to significantly enhance revenue visibility for SEIL over the next few years. The guaranteed throughput of 1.20 lakh tonnes per annum will result in steady operational cash flows, while also potentially improving the company's working capital cycle through predictable billing schedules.

With steel prices remaining volatile globally and raw material prices rising intermittently, conversion contracts offer relative stability as they are service-based, insulating the company from raw material cost fluctuations.

Moreover, the company clarified that this order does not constitute a related party transaction and the promoter group has no financial or business interest in RINL, ensuring transparency and governance in line with SEBI’s Listing Obligations and Disclosure Requirements (LODR).

Strategic Utilisation of SEIL's New Rolling Mill

The conversion work will be carried out using SEIL’s new rolling mill, which was recently commissioned and is designed to handle high-capacity billet processing with precision and efficiency. The plant, located in Vizianagaram, is integrated with SEIL’s existing steel-making infrastructure, allowing seamless operational transition from billet to finished product.

This will result in:

• Higher plant utilisation rates

• Optimised cost structures

• Improved economies of scale

• Increased brand credibility by association with Vizag Steel

By producing rebars under the established Vizag Steel brand, SEIL will also gain operational experience in premium TMT segments, possibly opening new avenues for further institutional orders in the future.

Broader Industry Context

This contract comes at a time when India’s infrastructure and housing sectors are on the rise, driven by continued government focus on capex. With demand for TMT rebars soaring across railways, roads, metros, and affordable housing, this contract is well-aligned with market needs.

PSUs like RINL have been increasingly outsourcing lower-margin or high-throughput processes to optimise internal capacities for higher-value production, and SEIL’s bid win is part of this larger outsourcing trend.

Further, the steel sector has been under pressure due to:

• High input costs (iron ore, coking coal)

• Global supply chain imbalances

• Slow demand recovery in some export markets

However, domestic consumption in India has remained strong, and contracts like this help companies like SEIL de-risk their business models by relying more on conversion-based, fee-driven revenues.

Compliance and Market Communication

SEIL’s disclosure complies with Regulation 30 and Para B of Part A of Schedule III of the SEBI (LODR) Regulations, 2015, and adheres to the latest circular from SEBI dated November 11, 2024 (SEBI/HO/CFD/PoD2/CIR/P/0155/2024).

The annexure attached with the regulatory filing details all material facts, including:

• Name of awarding entity: Rashtriya Ispat Nigam Limited

• Nature of contract: Billet-to-rebar conversion

• Value of contract: Up to ₹210 Cr.

• Duration: 2 years + 1 year (optional extension)

• Interest of promoters: None

• Related party status: No

This transparency is expected to boost investor confidence, particularly at a time when the market is rewarding mid-cap industrial stocks with strong order books and PSU associations.

Market Outlook and Shareholder Perspective

With this new contract in hand, SEIL’s financial outlook for FY26–FY27 looks stronger, especially in terms of topline stability. Investors and analysts will closely watch whether this contract improves the company’s EBITDA margins, given that conversion contracts usually carry fixed service-based returns and low volatility.

Also, this win may signal the company’s intent to compete more aggressively in institutional tenders, especially in areas like long steel products, infrastructure-grade rebars, and railway-grade steel—segments witnessing a rise in outsourced processing contracts.

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