Crisil Ratings has assigned its ‘Crisil BBB+/Stable/Crisil A2’ ratings to the bank facilities of Vibhor Steel Tubes Ltd (VSTL, erstwhile Vibhor Steel Tubes Pvt Ltd). The ratings reflect the extensive experience of VSTL promoters in the ERW pipe and galvanised pipe industry, and assured offtake agreements that provide revenue visibility, and efficient working capital management and healthy financial risk profile of the company. These strengths are partially offset by exposure to intense competition and capital expenditure (capex) risks and customer concentration in revenue profile. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of VSTL. |
Key Rating Drivers - Strengths Extensive industry experience of the promoters and assured offtake agreements that provide revenue visibility: The company is promoted by Vijay Kaushik and is currently managed by his son, Vibhor Kaushik. He is an electrical engineer from the Arizona State University. The promoters have over two decades of experience in the ERW pipe and galvanised pipe industry. This has given them an understanding of the market dynamics and enabled them to establish relationships with suppliers and customers. The company has an assured offtake agreement with Jindal Pipes Ltd (JPL; ‘Crisil A/Stable/Crisil A1’) for the sale of minimum 1,00,000 tonne per annum (TPA) of pipes, which are to be sold under the Jindal Star brand. The agreement was renewed in 2023 for six years. The same results in healthy market position and significant revenue visibility. This agreement has been long standing, resulting in healthy volume sales as reflected in revenue of Rs 996 crore in fiscal 2025 and estimated Rs 812 crore in the first nine months of fiscal 2026. Revenue growth is expected to be healthy over the medium term owing to operationalisation of the company’s Odisha unit with capacity of 156,000 TPA.
Efficient working capital management: Gross current assets (GCAs) were at 70-120 days for the three years ended March 31, 2025. The working capital management was efficient as reflected in GCAs at 118 days as on March 31, 2025, supported by receivables of 26 days and moderate inventory of 73 days. The working capital cycle is expected to remain moderate over the medium term.
Healthy financial risk profile: The capital structure was healthy owing to low reliance on external funds, yielding gearing of 0.91 time and total outside liabilities to adjusted networth ratio of 1.61 times as on March 31, 2025. Debt protection metrics were also comfortable owing to low leverage and healthy profitability. The interest coverage and net cash accrual to total debt ratios were at 3.25 times and 0.12 time, respectively, in fiscal 2025. The capital structure and debt protection metrics are expected to remain at similar level over the medium term despite debt-funded capex in the new Odisha unit. |
Key Rating Drivers - Weaknesses Customer concentration in revenue profile: VSTL faces significant customer concentration risks. JPL accounts for over 85% of its total sales. The high customer concentration makes the company’s revenue growth and profitability dependent on its key customer’s growth plans. However, the company is diversifying its product profile to include crash barriers, transmission tower lines and hexagonal poles to reduce its exposure to JPL and its share of revenue over the medium term. Capex risks: VSTL has invested in a new manufacturing unit in Odisha having capacity of 156,000 TPA. The cost of this capex is estimated around Rs 120 crore over fiscals 2025-2027. The same has been funded by debt and internal accrual. While it became operational in October 2025 with a focus on margin accretive products such as crash barriers, transmission tower lines and hexagonal poles, the impact of the capex on the business and financial risk profiles remains monitorable. Timely offtake of the capex, leading to substantial growth in revenue and improved operating profitability, will remain a key rating sensitivity factor.
Exposure to intense competition: Intense competition in the pipe and fitting industry, low product differentiation and high price sensitivity prevent the prompt pass-through of any increase in input costs to customers, resulting in moderate profitability as reflected in operating margin at 3.65-4.5% for the five fiscals through 2025. Declining realisation and diseconomies of scale during the offtake of the new Odisha unit resulted in operating margin falling to 3.44% in the first nine months of fiscal 2026. However, the same is expected to improve with the operationalisation of the Odisha unit and increase in share of margin accretive products in the revenue mix. |
Liquidity Adequate Bank limit utilisation was moderate at 70.58% on average for the 12 months ended February 28, 2026. Annual cash accrual is expected above Rs 24 crore against yearly term debt obligation of Rs 10-16 crore over the medium term and will cushion liquidity.
The current ratio was moderate at 1.37 times as on March 31, 2025. |
Outlook Stable Crisil Ratings believes VSTL will continue to benefit from the extensive experience of its promoters and established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company VSTL, incorporated in 2003 by Vijay Kaushik along with his family members, manufactures and sells mild steel black tubes and pipes, square pipes and galvanised iron pipes.
The company operates out of its manufacturing facilities located in Sukheli, Maharashtra, with a production capacity of 125,000 TPA and the second one is in Mehboob Nagar, Telangana, with a production capacity of 96,000 TPA. The company has also installed 2-megawatt (MW) solar rooftop solar power units (1 MW each at both the units) for captive consumption. Also, a new unit at Sundergarh Odisha with installed capacity of 156,000 TPA commenced production in June 2025.
It is listed on BSE Ltd and National Stock Exchange of India Ltd. The company is currently managed by Vijay Kaushik and Vibhor Kaushik. |
Key Financial Indicators
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Status of non cooperation with previous CRA VSTL has not cooperated with CARE Ratings Ltd (CareEdge Ratings), which has classified the firm as non-cooperative vide release dated March 11, 2026. The reason provided by CARE Ratings Ltd. (CareEdge Ratings) is non-furnishing of information for monitoring the rating. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Having sublimits- WCDL- Rs 50 crore; EPC/PSC/PCFC- Rs 20 crore; PIF- Rs 20 crore; ILC/FLC- Rs 20 crore; SBLC- Rs 20 crore; BG- Rs 50 crore.
^ - Having sublimit of SBLC- Rs 50 crore and BG- Rs- 50 crore
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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Criteria Details
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