MPK Steels IPO

M P K Steels operates two plants at the same premises in Rajasthan, offering significant production flexibility. This setup allows the company to develop and manufacture distinct products simultaneously, enhancing efficiency and enabling quicker responses to customer demands. Additionally, it optimises resource utilisation, reducing overhead costs and improving logistics, giving the company a competitive advantage in handling large and diverse orders.

The company claims to have invested in an extensive range of specialised dies, enabling precise steel production across various measurements and specifications. This capability allows M P K Steels to cater to a broad spectrum of customer needs, from standard sizes to complex, custom orders, and ensures high production flexibility and efficiency.

With over 20 years of consistent growth, M P K Steels has built a strong and trusted brand within the steel industry. The company claims to have long-standing relationships with distributors, some of whom have partnered with the company since its inception. These enduring relationships help drive repeat business, fostering customer loyalty and ensuring a stable market presence.

The company is ISO 9001:2015 certified for its quality management system, ISO 14001:2015 certified for its environmental management, and ISO 45001:2018 certified for its occupational health and safety standards. It has procured Bureau of Indian Standards (BIS) certification, such as IS 2062:2011.

The company has reported a consistent increase in revenue from operations and profit after tax (PAT). Revenue from operations increased from Rs 137.55 crore in FY23 to Rs 186.60 crore in FY24 and Rs 206.58 crore in FY25. PAT increased from Rs 1.81 crore in FY23 to Rs 3.11 crore in FY24 and Rs 6.05 crore in FY25.

The top supplier accounted for Rs 39.74 crore (20.50 percent) of the company’s gross purchases in FY25, Rs 36.11 crore (19.45 percent) in FY24, and Rs 20.14 crore (14.55 percent) in FY23. Any disruption in supplies from this vendor could adversely affect the company’s business and finances.

The top customer accounted for Rs 43.69 crore (21.15 percent) of the company’s revenue in FY25, Rs 47.43 crore (25.42 percent) in FY24, and Rs 42.41 crore (30.83 percent) in FY23. Any failure to retain this key customer, expand the customer base, or loss of business from them can adversely affect the company’s business and financial standing.

M P K Steels relies heavily on the availability of key raw materials, such as billets and ingots, for its operations. The company does not have long-term agreements with suppliers; instead, it operates on a verbal purchase order or order-to-order basis. Any disruptions in the supply chain, price fluctuations, or regulatory changes regarding environmental compliance could lead to delays in production and delivery, potentially increasing production costs. This could result in a loss of customers, decreased revenues, and financial instability.

M P K Steels entered into a one-time settlement (OTS) in 2019 to settle an outstanding loan of Rs 66.63 crore with the State Bank of India, which was subsequently assigned to Assets Care and Reconstruction Enterprises Limited (ACRE). The company settled this debt for Rs 24 crore, including a cessation of Rs 11.49 crore due to restructuring. While the company has since obtained a No Dues certificate, the past OTS could potentially affect its credibility with banks and financial institutions, making it harder to access funds in the future. Any difficulty in securing financial support could adversely impact the company's operations and growth.

The company reported negative cash flow from operating activities amounting to Rs 13.99 crore in FY25 and Rs 3.55 crore in FY23. Additionally, negative cash flow from investing activities amounted to Rs 0.76 crore in FY23. The company also reported negative cash flow from financing activities amounting to Rs 1.62 crore in FY24. If these trends continue, it could adversely affect the company's growth, financial stability, and overall business operations.

The company has contingent liabilities amounting to Rs 2.22 crore. If any of these contingent liabilities materialise, it could negatively affect the company’s financial condition.

The company derives a significant portion of its revenue from the sale of MS channels. It accounted for Rs 195.82 crore (94.79 percent) of the company’s total revenue in FY25, Rs 178.02 crore (95.40 percent) in FY24, and Rs 129.70 crore (94.3 percent) in FY23. Any decline in the demand for this key product, or if customers start relying on other suppliers, could negatively impact the company’s financial condition and cash flow.

The company derives a substantial portion of its revenue from Rajasthan. It accounted for Rs 197.88 crore (95.79 percent) of the company’s total revenue in FY25, Rs 185.16 crore (99.22 percent) in FY24, and Rs 136.47 crore (99.21 percent) in FY23. Furthermore, the company sourced a substantial portion of its raw materials from this state. Rajasthan accounted for Rs 152.28 crore (86.27 percent) of the company’s total purchases of billets in FY25, Rs 141.05 crore (85.85 percent) in FY24, and Rs 75.63 crore (74.08 percent) in FY23. This heavy reliance on a single region exposes the company to risks associated with economic fluctuations, competitive pressures, or demographic changes in Rajasthan, any of which could significantly impact its revenue and overall financial performance.

The company, its promoter, director, and group entities are involved in certain ongoing tax proceedings. Any adverse judgments in any of these cases could be detrimental to the company’s business prospects.

M P K Steels has faced a relatively high employee attrition rate of 16.67 percent in FY25, 18.35 percent in FY24, and 13.46 percent in FY23. High turnover can disrupt business operations, lead to delays in product development, and undermine the company's ability to scale effectively.

As of FY25, the company had financial indebtedness of Rs 18.48 crore. Any failure to service or repay these loans can hurt the company’s operations and financial position.