"Revenue soared. Profits doubled. But the bank account barely moved."
That's the story of A-One Steels India Ltd.
On paper, FY26 was the company's strongest year ever. Revenue crossed ₹3,396 crore, EBITDA jumped 40%, and net profit more than doubled.
Yet, despite all those numbers, cash barely increased.
So, what really happened?
Let's break it down.
Most steel manufacturers specialize in one part of the production process.
A-One does something different.
It controls almost the entire steel manufacturing value chain, allowing it to earn margins at multiple stages instead of just one.
Its process looks like this:
Iron Ore → Sponge Iron → MS Billets → Finished Steel Products
Here's what happens at every stage:
| Stage | What It Does |
|---|---|
| Iron Ore | Raw material sourced primarily from Karnataka's Bellary mining region |
| Sponge Iron | Iron ore is heated with coal to remove oxygen |
| MS Billets | Molten steel is refined and cast into billets |
| Finished Steel | Billets are converted into TMT bars, pipes, HR coils and other products |
Instead of buying billets from someone else, A-One manufactures them internally.
That means every tonne of steel passes through multiple value-added stages inside the same company.
Saving even a small amount of fuel can significantly improve profitability.
Normally, steel billets cool down before entering the rolling mill.
A-One skips this step.
The company transfers billets directly into rolling mills while they are still hot.
This avoids reheating.
Result?
Lower fuel consumption
Lower production cost
Faster manufacturing cycle
2. Captive Power Generation
Steel plants generate enormous waste heat.
Instead of letting that energy disappear, A-One captures it through Waste Heat Recovery Boilers, producing electricity internally.
The company currently operates:
34 MW captive power capacity
Waste heat recovery units
Access to nearly 265 MW of green energy
Lower electricity bills directly improve operating margins.
A-One's flagship product is A-One Gold TMT Bars, used in residential and commercial construction.
Manufactures: Pipes, HR Coils, Billets, Sponge Iron
Distribution network:1,200+ dealers, Builders, Infrastructure contractors
Major customers: Sobha, NCC, Casa Grande
Interestingly, exports contribute only ₹55 crore.
This is largely a South India-focused business serving domestic construction demand.
The company currently operates seven manufacturing plants across Karnataka and Andhra Pradesh.
TMT Bars: 2,16,000 MT
Billets: 2,00,000 MT
HR Coils: 2,00,000 MT
Pipes: 1,20,000 MT
| Particulars | FY26 | FY25 | Growth |
|---|---|---|---|
| Revenue | ₹3,396 Cr | ₹3,004 Cr | 13% |
| EBITDA | ₹278 Cr | ₹199 Cr | 40% |
| EBITDA Margin | 8.2% | 6.6% | +160 bps |
| Net Profit | ₹111 Cr | ₹47 Cr | 138% |
| EPS | ₹16.21 | ₹7.06 | 130% |
At first glance, something looks unusual.
Revenue grew only 13%.
Profit exploded 138%.
How?
Steel manufacturing is a business with high fixed costs.
Whether the plant operates at 50% or 90% capacity,
The company still pays for: Salaries, Plant maintenance, Interest, Depreciation, Factory overheads
When production rises, most of these costs barely change.
FY26 added nearly ₹392 crore in top line.
Meanwhile:
Interest expense reduced slightly
Employee costs increased only modestly
Depreciation remained largely stable
As a result, a large portion of every top line rupee earned flowed directly to the bottom line.
That's operating leverage in action.
The same phenomenon can work in reverse if steel demand weakens.
Steel is primarily a raw-material business.
Here's how every ₹100 of revenue was spent.
| Expense | FY26 | % of Revenue |
|---|---|---|
| Raw Materials | ₹2,731 Cr | 80.4% |
| Power & Fuel | ₹247 Cr | 7.3% |
| Other Expenses | ₹120 Cr | 3.5% |
| Interest | ₹86 Cr | 2.5% |
| Depreciation | ₹45 Cr | 1.3% |
| Employee Cost | ₹44 Cr | 1.3% |
More than 80% of revenue disappears into iron ore, coal and scrap.
That leaves only a thin margin.
If raw material prices rise faster than steel prices, profits can disappear quickly.
FY26 happened to be a year when the spread improved.
| Particulars | FY26 | FY25 |
|---|---|---|
| Fixed Assets | ₹292 Cr | ₹316 Cr |
| Inventory | ₹700 Cr | ₹610 Cr |
| Trade Receivables | ₹696 Cr | ₹439 Cr |
| Net Worth | ₹759 Cr | ₹648 Cr |
| Borrowings | ₹746 Cr | ₹696 Cr |
| Debt/Equity | 0.98x | 1.08x |
One number stands out.
The company owns ₹292 crore of fixed assets.But nearly ₹1,396 crore is tied up in: Inventory and Receivables
This shows that working capital—not factories—is where most capital is locked.
This is where the entire story changes.
| Particulars | FY26 |
|---|---|
| Operating Cash Flow | ₹32 Cr |
| Investing Cash Flow | ₹1 Cr |
| Financing Cash Flow | -₹30 Cr |
| Net Cash Increase | ₹4 Cr |
The business actually generated ₹263 crore before working capital adjustments.
Then things changed.
Receivables increased by ₹264 crore.
Inventory consumed another ₹90 crore.
Supplier credit provided ₹181 crore of support.
After all these movements,
operating cash fell to just ₹32 crore.
Finally,
cash in hand increased by only ₹4 crore.
Trade receivables jumped sharply.
FY2025: 439 Cr
FY2026: 696 Cr
That's a 59% increase, even though revenue grew only 13%.
Collection days stretched from:
53 days → 59 days
In simple words,
A-One sold significantly more steel.
It recorded those sales as revenue.
It booked profits on those sales.
But much of the money is still sitting with customers.
Accounting profit increased.
Cash did not.
FY26 proves why profit and cash flow are two very different things.
A-One Steels delivered its strongest financial performance ever:
Revenue crossed ₹3,396 crore
EBITDA grew 40%
Net profit surged 138%
Yet operating cash flow collapsed because more money got trapped in inventory and unpaid customer invoices.
The company didn't have a profitability problem.
It had a working capital problem.
For investors, that's the biggest takeaway.
Because in manufacturing, profits may look impressive—but cash is what ultimately keeps the business running.