SAL Steel Secures ₹150 Cr Working Capital Facility, Eyes ₹2000 Cr Borrowing Limit Boost

SAL Steel's board has approved a ₹150 crore working capital facility from YES Bank, secured by company assets. The company also plans to propose a significant increase in its overall borrowing limit to ₹2000 crore, pending shareholder approval.

Board Actions and Shareholder Consideration

On March 28, 2026, SAL Steel's Board of Directors met to authorize important financial moves. A key decision was the approval of a ₹150 crore working capital facility from YES Bank Limited. This loan is secured by the company's current and fixed assets, and potentially personal or corporate guarantees.

In a separate move, the board proposed increasing the company's total borrowing limit to ₹2000 crore. This significant hike requires shareholder approval via a postal ballot, with a deadline for votes set for March 27, 2026.

The board also authorized an amendment to a hypothecation deed with AIA Engineering Ltd., indicating procedural updates to existing contracts.

Importance of New Funding and Increased Limit

The ₹150 crore working capital facility from YES Bank is vital for SAL Steel's daily operations and managing its cash flow cycle.

If shareholders approve, the proposed increase in the overall borrowing limit to ₹2000 crore would give SAL Steel substantial financial flexibility. This could be used for future growth initiatives, potential acquisitions, or to meet unexpected capital needs.

SAL Steel's Financial Context and Debt

SAL Steel operates in the Indian steel sector, involved in manufacturing sponge iron, ferro alloys, iron ore pellets, and finished steel products, as well as power generation.

A persistent challenge for SAL Steel has been its high leverage. The company's debt-to-equity ratio stood at 4.97 as of March 2025, a notable increase from the previous year. The ratio was reported as 4.58 for FY25, showing a substantial reliance on debt financing for its operations and expansion.

Key financial metrics highlight this situation:

• The company's Debt to Equity Ratio was 4.97 as of March 2025 (Standalone).
• The Debt to Equity Ratio was also reported as 604.6% as of March 2025.
• Total debt amounted to ₹2.0 billion as of December 2025.

Immediate Support and Future Flexibility

The secured working capital facility from YES Bank provides immediate support for operational liquidity. This could help improve the company's ability to manage its supply chain and production cycles.

For investors, these moves signal potential for increased financial maneuverability. However, this must be weighed against the company's existing debt profile and the need for shareholder consent on the borrowing limit.

Key Risks and Considerations

The proposed increase in the borrowing limit to ₹2000 crore faces an execution risk, as it hinges on shareholder approval.

The ₹150 crore facility is secured by company assets. This means lenders have a claim on these assets if SAL Steel defaults on the loan, a standard practice for asset-backed financing.

SAL Steel's already high debt-to-equity ratio (around 4.58 as of FY25) remains a significant factor. Any new borrowing must be managed carefully to avoid further weakening its financial position.

Leverage Compared to Industry Peers

SAL Steel's high leverage is notably different from its competitors. For example, public sector giant SAIL had a debt-to-equity ratio of only 0.3 in FY25.

Tata Steel, another major player, reported a debt-to-equity ratio around 99.7%, which is high but still lower than SAL Steel's figures.

Jindal Steel & Power Ltd. (JSPL) maintains a healthier debt-to-equity ratio of 38%.

Investor Focus and Future Watchpoints

Investors will be closely watching the outcome of the shareholder vote on the proposed ₹2000 crore borrowing limit increase.

Key metrics to track will include how SAL Steel utilizes the ₹150 crore working capital facility and its impact on operational efficiency.

The company's ability to manage its high existing debt alongside any new borrowing will be under scrutiny. Future financial results will show how this increased flexibility translates into improved performance.