Detailed rationale

Crisil Ratings has revised its rating outlook on the long-term bank facilities of Vidya Wires Ltd (VWL) to ‘Positive’ from ‘Stable’, while reaffirming the rating at ‘Crisil A-’. The rating on the short-term bank facilities has been reaffirmed at ‘Crisil A2+’. Crisil Ratings has also withdrawn its rating of Rs 23.81 crore on the proposed working capital limit as requested by the company, and rating on the term loan on receipt of ‘no dues certificates’ (NDC) from the bankers. This is in line with the withdrawal policy of Crisil Ratings.

 

The revision in outlook reflects the expected improvement in the financial risk profile, as the company has raised funds through an initial public offer (IPO). The company was listed on the National Stock Exchange and the Bombay Stock Exchange on December 10, 2025, and it raised Rs 300 crore via an IPO, out of which Rs 274 crore was towards the fresh issue and balance Rs 26 crore towards offer for sale. Out of the proceeds of the fresh issue, Rs 140 crore is likely to be utilised to fund the capital expenditure (capex) towards setting up a new project in subsidiary, Alcu Industries Pvt Ltd (ALCU), Rs 100 crore for repayment of the current outstanding working capital facility, and balance Rs 34 crore for general corporate purposes. Networth is expected to increase to Rs 475-500 crore as on March 31, 2026, as against Rs 177 crore as on March 31, 2025. Further, with increased networth and proposed repayment of debt, capital structure and debt protection metrics are expected to improve significantly. Also, the funds raised via IPO will cushion the overall liquidity. Scale of operations is expected to increase with commercial operations of new project in ALCU likely to commence from February 2026. Operating margin has improved over the past three years ended March 31, 2025, due to better realisations and operational synergies due to economies of scale; sustenance of the operating margin remains a key monitorable.

 

The ratings continue to reflect the extensive experience of the promoter in the electrical components and equipment industry, the strong distribution network, established clientele, and efficient working capital management. These strengths are partially offset by the thin operating margin and exposure to intense competition and volatility in raw material prices.

Analytical approach

Crisil Ratings has combined the business and financial risk profiles of VWL and ALCU because ALCU is a wholly owned subsidiary of VWL, and is expected to have significant business, financial and managerial linkages.

 

Unsecured loan of Rs 15 crore as on March 31, 2025, has been treated as 75% equity and 25% debt as funds have been maintained consistently over the past few fiscals, and likely to remain so over the medium term. 

 

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

Key rating drivers - Strengths 

Extensive experience of the promoter, strong distribution network and established clientele

The four-decade-long experience of the promoter and his in-depth understanding of market dynamics will continue to support the business risk profile. The copper wires and conductor industry is highly competitive, with unorganised players cornering significant market share. Nevertheless, the company has established its market position, driven by reputed clientele and strong distribution network. As a result, revenue grew 26% on-year to Rs 1,485 crore in fiscal 2025, from Rs 1,182 crore in fiscal 2024, led by 14% growth in volume and better average sales realisations. Further, from the IPO proceeds, capex in subsidiary, ALCU of Rs 140 crore is expected to commence from February 2026.

 

Healthy financial risk profile

Out of Rs 300 crore raised via the IPO, Rs 274 crore was towards the fresh issue and balance Rs 26 crore towards offer for sale. Out of the proceeds of the fresh issue, Rs 140 crore is likely to be utilised to fund the capital expenditure (capex) towards setting up a new project in subsidiary, ALCU, Rs 100 crore for repayment of the current outstanding working capital facility, and balance Rs 34 crore for general corporate purposes.  Networth is projected to increase to Rs 475-500 crore as on March 31, 2026, as against Rs 177 crore as on March 31, 2025. Capital structure has remained healthy, with gearing and total outside liabilities to tangible networth ratio estimated at 0.76 time and 0.86 time, respectively, as on March 31, 2025. Further with increased networth and proposed repayment of debt, capital structure is expected to improve significantly.

 

Efficient working capital management

Gross current assets (GCAs) stood at 69 days as on March 31, 2025, driven by low inventory (23 days) and moderate receivables (35 days). The working capital cycle is expected to remain within a similar range over the medium term. Any stretch in working capital cycle due to commencement of new project in ALCU remains monitorable.

Key rating drivers - Weaknesses 

Exposure to intense competition and thin operating margin

Intense competition and fragmentation in the copper winding wires industry, along with limited value addition, restrict the ability of organised players to command premium pricing. Furthermore, the industry is dominated by the unorganised sector. Operating margin has improved by only 58 basis points to 4.60% in fiscal 2025, from 4.02% in the previous fiscal, but has remained low in the range of 3–5% over the three fiscals ended March 31, 2025, and is expected to be at a similar level over the coming years. Sustenance of margin at current levels remains monitorable.

 

Susceptibility to volatility in raw material prices

As raw material prices (mainly copper) account for more than 90% of revenue, operating performance remains susceptible to fluctuations in copper prices. With low value addition, any sharp movement in input prices could impact realisations and absorption of fixed cost, and  affect profitability adversely. Bulk of the inventory remains order-backed and the company places back-to-back orders for raw materials and inks short to medium-term contracts with suppliers with price linked to external benchmarks. This is reflected in relatively stable operating margin of 3-5% over the past few fiscals. However, any sharp fluctuation in prices may impact profitability and remains monitorable.

Liquidity Strong

Bank limit utilisation averaged 85% for the 12 months through November 2025. The company is expected to generate healthy cash accrual against minimal scheduled debt repayment over the medium term. Going forward, working capital requirement is likely to increase once the project under ALCU commences. The current ratio was healthy at 1.97 times as on March 31, 2025. Funds raised via IPO will cushion overall liquidity. Low gearing and healthy networth should provide financial flexibility in case of any adverse condition or downturn in the business.

Outlook Positive

Crisil Ratings believes the credit risk profile of VWL is likely to benefit from the scale up of operations and sustenance of the margin. The company will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors

• Sustained growth in revenue (by 30%) driven by higher volume and steady operating
• margin, leading to higher cash accrual.
• Timely commencement and stabilisation of the new unit in ALCU
• Financial risk profile remaining comfortable, with prudent working capital management

 

Downward factors

• Sharp moderation in revenue or profitability, leading to accrual below Rs 25 crore
• Stretched working capital cycle, with GCAs of around three months

About the company

Established in 1982 by Mr Shyamsunder Rathi, VWL has an installed capacity of 19,680 MTPA and manufactures insulated copper wires (enamelled copper winding wires along with strips, paper-covered copper wires, strips and bare copper wires) at its facility in Anand, Gujarat. VWL was initially a private limited company and was reconstituted as a public limited company with the current name.

 

ALCU was incorporated as a wholly owned subsidiary of VWL, and in the project phase with proposed manufacturing facility of 18,000 MTPA. It plans to manufacture various products such as copper busbar and bare copper conductors, continuously transposed copper conductors, PV round ribbon, solar cables, enameled copper rectangular strips for EV (electric vehicle) motors, multi paper covered copper conductors, and enameled aluminium winding wires.

Any other information: Not applicable