Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA-/Stable/Crisil A1+’ ratings to the bank facilities and non-convertible debentures of Evonith Value Steel Limited (EVSL; part of the Evonith group). Rating on the bank facilities amounting to Rs 1,350 crore has been withdrawn basis client request and post receipt of no objection certificate from lenders. The withdrawal is in line with the policy of Crisil Ratings on withdrawal of ratings.

 

Crisil Ratings has combined the business and financial risk profiles of Evonith Metallics Limited (EML) and EVSL due to their close managerial, operational and financial linkages. Both entities operate within an integrated steel complex, with EML as the upstream unit focused on producing hot metal and pig iron, and EVSL as the downstream unit that processes the hot metal to manufacture finished flat steel products. These plants belong to the erstwhile distressed Uttam Galva group and were acquired by Nithia Capital through the National Company Law Tribunal (NCLT) process in December 2020.

 

The ratings consider the marked turnaround and ramp-up in the assets after being taken over by Nithia Capital. The group has healthy operating performance, driven by efficient operations, strategic location in Central India with proximity to raw material sources and strong financial risk profile. The ratings also consider the group's status as an Ultra Mega Project under the Government of Maharashtra's Package Scheme of Incentives 2013, which makes it eligible for incentives of up to Rs 371 crore per annum.

 

During fiscal 2025, the group's operational efficiency was enhanced by the recommissioning of 0.6 metric tonne per annum (MTPA) blast furnace in November 2024, resulting in total blast furnace capacity increasing from 0.8 MTPA to 1.4 MTPA. Resultantly, hot metal production has increased to ~1.1 MTPA in first eleven months of fiscal 2026 translating to ~90% utilization from 0.9 MT in fiscal 2025. The group reported consolidated revenue (net of intercompany transactions) for the first eleven months of fiscal 2026 was Rs 5,959 crore, with earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 1,015 crore, supported by higher volume, favourable realisations and operational efficiencies.

 

The ratings also take into account the likely impact of the ongoing conflict in the Middle East on the company's overall business and financial risk profile. Based on discussions with management, Crisil Ratings understands that the company has minimal reliance on gas for its business operations, given its blast furnace capacity, which relies on iron ore and coking coal for steel production. Although some gas is used in downstream capacities, the company plans to replace this with internally produced gas, such as blast furnace or coke oven gas. While the second quarter of the upcoming fiscal year may see some pressure on margins due to increasing production costs from higher energy and shipping costs, the impact is expected to be largely neutral over the full fiscal year 2027. However, any prolonged escalation of the conflict in the Middle East that affects the company's business operations will be a key monitorable.

 

Going forward, Crisil Ratings expects the group's performance to sustain, driven by healthy demand from the domestic end-user industry and stable steel industry realisations. Furthermore, the commissioning of a new 0.3 MTPA ductile iron (DI) pipe plant in the first quarter of fiscal 2027 (from earlier expectation of third quarter of fiscal 2026) is expected to incrementally add to the Ebitda.

 

The ratings also reflect the group's strong financial profile, driven by healthy capital structure and comfortable coverage indicators despite the company undertaking capex of ~Rs 900 crore in fiscal 2027 to add downstream capacities. Of this, Rs 500 crore is the committed capex. As on February 28, 2026, the group had a term loan debt of Rs 1,616 crore which has subsequently been refinanced along with a top-up of Rs 384 crore. Going forward, gross debt is expected to remain at Rs 2,000-2,200 crore on a steady state, with net leverage ratios improving as accrual strengthens. The net debt to Ebitda ratio is expected to remain comfortably below 1.5 times over the next three fiscals. The ratings also consider the group's healthy cost of borrowing after the recent refinancing exercise in March 2026. Crisil Ratings notes the management’s articulation of increasing installed capacity from 1.4 MTPA currently to 3.0 MTPA by fiscal 2030 through brownfield expansion, which is expected to be prudently funded.

 

The ratings also factor in the technical, operational and managerial expertise the Evonith group receives from its sponsor, Nithia Capital, whose founders have an established track record of turning around and scaling up metals and mining businesses in emerging markets for decades.

 

However, these strengths are constrained by relatively moderate size, lack of raw material integration (though partially offset by proximity to raw material sources) and susceptibility to demand and price risk due to the inherently cyclical nature of the steel industry.

Analytical Approach

For arriving at its ratings, Crisil Ratings has combined the business and financial risk profiles of EML and EVSL, ccollectively referred to as the Evonith group. This is because these entities are under common management and have strong business and financial linkages.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Business risk profile supported by healthy operational performance

EML and EVSL operate in an integrated steel complex in Wardha, Maharashtra. The assets are strategically located near major customer markets in central and western parts of the country. The location provides access to key raw material sources, such as iron ore mines in Jabalpur, Gadchiroli and Chhattisgarh (within 300 km radius of the Evonith plants) reducing both transportation cost and transit time. Moreover, power requirement is fully tied-up through dedicated power plants in and around the Wardha complex. The requirement of coking coal is satisfied through imports from Australia and New Zealand. The group has short-term coking coal procurement contracts, based on index-based pricing which reduces the price risk and provides operational flexibility by allowing payments to be based on consumption. Moreover, the plant premises have a dedicated railway siding for transportation of raw materials and finished products.

 

The plants have healthy capacity utilisation, with both blast furnaces fully operational at ~90% utilisation year-till-date in fiscal 2026. In first eleven months of fiscal 2026, reported revenue stood at Rs 5,959 crore (Rs 5,008 crore in fiscal 2025, Rs 5,167 crore in fiscal 2024, Rs 2,633 crore in fiscal 2021) with Ebitda margin at 17.0% (11.1% in fiscal 2025, 14% in fiscal 2024 and 12.9% in fiscal 2021). Margins were higher in fiscal 2026 due to better realisation, post imposition of safeguard duty as well as cost efficiency measures. The Ebitda per tonne stood at Rs 8,857 during the first eleven months of this fiscal (Rs 6,718 per tonne in fiscal 2025) driven by recovery in steel realisations across the industry. Most of the hot metal produced is consumed internally for production of HRC, cold rolled steel (CRC) and other value-added products, with the rest sold externally as pig iron. As the portfolio of value-added products increases, more hot metal is expected to be consumed in-house, driving growth and improving margin. Strategic upgrades, such as the increase in pulverised coal injection rate, have also contributed to better operating efficiencies.

 

Benefits available under the Government of Maharashtra’s mega projects incentives

As an Ultra Mega Project under the Government of Maharashtra's package scheme of incentives, EML is entitled to a 9% state goods and services tax (SGST) refund on the first sale of eligible products within Maharashtra. The refund is linked to the percentage of the company's fixed capital investment, with currently a maximum amount of Rs 371 crore per annum. Although the refunds are received with a lag, the group has a healthy track record of receiving these benefits every year. This trend is expected to continue, with the group cumulatively receiving Rs 2,500–2,700 crore of incentives over the period of eligibility, enhancing its per tonne profitability. Any further capex addition by the company will also be eligible for this benefit.

 

Healthy financial risk profile

As on March 31, 2026, the group’s term loan debt is estimated at Rs 1,616 crore. The leverage is expected to be managed prudently, with net debt to Ebitda comfortably below 1.5 times and interest coverage ratio above 5 times over the medium term, despite sizeable plans for capital expenditure (capex). The group successfully refinanced its debt in October 2024, converting high-coupon non-convertible debentures into a term loan of Rs 1,700 crore, reducing interest costs from approximately 19% to 11% in fiscal 2025 and further to below 9% in fiscal 2026 with the recent refinancing activity. The refinancing has eased liquidity pressures by extending the repayment timeline over a seven-year period, allowing the company to better manage its cash flows. The group maintains a robust working capital cycle with healthy inventory of 1.5-2 months, with majority sales done on cash basis, minimising reliance on working capital requirement. The working capital facilities of Rs 800 crore, largely unutilised, provide additional comfort to overall liquidity.

 

Established track record of the sponsors

Nithia Capital has a proven track record of successfully reviving multiple metal and mining assets across emerging markets. The founder, Mr Jai Saraf, and other senior management personnel have held leadership positions in renowned companies, providing valuable guidance and expertise. Since acquiring these assets at a significant haircut from NCLT, the sponsors have invested significantly in debottlenecking and expansion, increasing the hot metal capacity from 0.5 MTPA to 1.4 MTPA over a three-year period. Nithia's strategy of reinvesting profits rather than distributing dividends has been instrumental in driving this growth.

Key Rating Drivers - Weaknesses 

Relatively moderate scale of operations; likely to increase over the medium term

The Evonith group's scale of operations is relatively moderate compared to other established domestic flat steelmakers, which may limit its bargaining power with suppliers and customers. However, the group plans to increase its capacity through brownfield expansion, aiming to reach 3.0 MTPA by 2030, which will improve its market position. The successful commissioning of this expansion will be a key monitorable, as it exposes the group to project risk and requires prudent funding.

 

Susceptibility to volatility in key raw material prices and cyclicality associated with the steel industry

The inherent cyclicality in the steel industry and nuances in demand in the end-user industry expose steelmakers to a high degree of volatility in operating margins and, in turn, to debt protection metrics. In fiscal 2025, the margin was impacted due to moderation in realisation resulting from higher low-cost imports, while in fiscal 2023, the cost of production was affected by unfavourable raw material price movements. The group's lack of captive iron or coal mines and limited backward integration in raw materials makes it more vulnerable to sharp volatility in profitability. Any significant variation in demand and pricing scenarios will remain a key monitorable.

Liquidity Strong

As on March 24, 2026, the group had total liquidity (including cash, liquid investments and unutilized fund based working capital facilities) of ~Rs 700 crore. The utilisation of working capital limits for 12 months through February 2026 has been moderate and sufficient cushion to meet short-term needs, if any. The liquidity cushion will be sufficient for expected debt obligations of Rs 193 crore over the next 12 months and expected interest payments of Rs 182 crore.

Outlook Stable

The group will benefit from efficient operations and healthy balance sheets over the medium term.

Rating sensitivity factors

Upward factors

• Timely commissioning and ramp up of planned capex without material cost overrun, ramping up of newer capacities supporting healthy volume growth and increased level of integration resulting in net cash accrual rising beyond Rs 1,200 crore on steady basis
• Sustenance of strong debt protection metrics while maintaining healthy liquidity

 

Downward factors

• Deterioration in operating performance due to weakened demand and intense competition, leading to significant decline in operating profitability
• Time or cost overruns or higher-than-expected debt-funded capex/acquisition leading to deterioration in the debt protection metrics, with net debt to Ebitda ratio of over 1.5 times on sustained basis
• Delay in receipt of receivables and/or mega benefits

About the Company

Both EML and EVSL, part of the Evonith Steel group, are located at Wardha (spread across 1,000 acres) in Maharashtra and formerly belonged to the Uttam Galva group. The assets were acquired at significant haircut (> 60%) for ~Rs 2,000 crore. Nithia Capital and CarVal Investors acquired both the companies in December 2020 from NCLT and rebranded them as Evonith Metallics and Evonith Value Steel. CarVal investors exited the company. EML is an upstream unit focused on iron-making, producing hot metal and pig iron, while EVSL is the downstream unit that processes this hot metal to manufacture finished flat steel products. EML is engaged in the manufacturing of hot metal/pig iron from iron ore, which are intermediate products for manufacturing of value-added steel in EVSL.  Post the NCLT resolution, Wardha Steel Holding Pte Ltd (WSL) is the promoter entity for both the companies. WSL is a Singapore-based special purpose vehicle (SPV) held by Nithia (~87.9%) and Vonix Pte Ltd (~12.1%) a Singapore-based private equity fund.

Key Financial Indicators* 

Particulars	Unit	2025	2024
Operating income	Rs crore	4,951	5,117
Profit after tax (PAT)	Rs crore	(54)	70
PAT margin	%	(1.1)	1.4
Adjusted debt/adjusted networth	Times	0.54	0.54
Interest coverage	Times	2.06	2.64

*as per analytical adjustments made by Crisil Ratings

Any other information: Not applicable