Nilachal Carbo Metalicks

• Nilachal Carbo Metalicks is coming out with an initial public offering (IPO) of 66,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 85 per equity share.
• The issue will open on September 8, 2025 and will close on September 10, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced at 8.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Sun Capital Advisory Services.
• Compliance Officer for the issue is Haraprasad Rout.

Profile of the company

Nilachal Carbo Metalicks is engaged in the business of manufacturing of Low Ash Metallurgical (LAM) Coke. The company has specialized in making Ferro Alloy Grade coke and building a long-term customer relationship with most of the top ferro chrome manufacturers in the country. The company’s owned Plant is located at Baramana, Jajpur, Odisha where it currently operates three batteries with 32 ovens in each battery (total 96 ovens) with an annual manufacturing capacity of 60,000 Metric Tonnes Per Annum (MTPA). The company also has second Plant having manufacturing facilities on leased basis from Srinivasa Coke Private Limited at Visakhapatnam, Andhra Pradesh which is having one battery with 18 ovens with the installed capacity of 18,000 MTPA. The total aggregating capacity of the company (owned + leased) is 78,000 MTPA for both the units. The company also has a tie-up for contract manufacturing for its product with Om Avi Carbon Resources Private Limited and make use of their 24,000 MTPA capacity for its use.

The company is now proposing to install one more additional battery with 36 ovens to install additional capacity of 34,400 MTPA of LAM Coke at existing vacant land available at its existing Plant at Baramana, Jajpur, Odisha. After implementation of the proposed expansion, the company’s own total capacity will be 94,400 MTPA and total capacity (including leased one) shall be 1,12,400 MTPA. The company a specialized focus on producing high-quality Ferro Alloy Grade Coke, since the company’s establishment in 2003, it has positioned itself as one of the key players in the metallurgical industry.

The company’s product portfolio includes LAM Coke, Low Phosphorus Nut Coke, Ultra Low Phosphorus Nut Coke & High Grade Coke Fines. Its owned manufacturing plants are strategically located near the Paradip Port in Odisha and the Vizag Port in Visakhapatnam, providing it with a logistical advantage for easy transportation. Furthermore, the proximity of Ferro Chrome producers within a 150-200 km radius of its at Baramana, Jajpur, Odisha, including the Kalinga Nagar Industrial Complex just 25 km away, is major industrial center of Odisha which enhances its market reach.

Proceed is being used for:

• Funding Capital expenditure for installing One Coke Oven Plant for expansion of capacity
• Funding modernization of existing plant
• General corporate purposes

Industry Overview

The country has witnessed the highest ever coal production in the year 2023-24. The all-India coal production in FY 2023-24 was 997.25 MT (Prov.). As compared to 893.19 MT during the FY 2022-23, there is a growth of about 11.65% in the FY 2023-24. CIL produced 773.64 MT, including custodian mines, against the annual target of 780.00 MT. The SCCL produced 70.02 MT of coal during 2023-24 as against the annual target of 70.00 MT. The overall demand for coal for 2023-24 was estimated at 1196.60 MT. All India coal supply in FY 2023-24 was 972.65 MT (Prov.). As compared to 877.36 MT during the FY 2022-23, there is a growth of about 10.88% in the FY 2023-24. Most of the requirement of coal in the country is met through indigenous production / supply. The focus of the Government is on increasing the domestic production of coal and to eliminate non-essential import of coal in the country.

Government has launched 'Mission Coking Coal' in August, 2021 to suggest roadmap to augment the production and utilization of domestic coking coal in India by 2030. Mission Coking Coal document has made recommendations majorly relating to new exploration, enhancing production, enhancing washing capacity, auction of new coking coal mines. Domestic raw Coking Coal production is likely to reach 140 MT [105 MT by CIL and 35 MT by allocated coking coal blocks] by 2030. Meanwhile, Low Ash Met Coke is produced by destructive distillation of coking coal in the absence/regulated presence of oxygen at high temperatures (ranging between 1100 to 1350 degree centigrade) causing the coal to soften, liquefy and then re-solidify into hard but porous lumps. Met Coke is a form of carbon along with some mineral and residual volatile material. 

For producing 181 MT steel through blast furnace route by FY 2030 as per National Steel Policy 2017, about 161 MT coking coal (10 -11 % ash) would be required. The demand for domestic coking coal would depend on whether stamp charging technology is being used before feeding coal into coke oven or not. 1) Without stamp charging demand for raw coking coal and washed coking coal (assuming 33% yield) has been estimated as 121 MT and 40 MT respectively. 2) With stamp charging demand for raw coking coal and washed coking coal (assuming 33% yield) has been estimated as 170 MT and 56 MT respectively. Therefore, coking coal washery capacity would be required to wash 121 MT and 170 MT raw coking coal under 1 and 2 respectively.

Pros and strengths

Strategic location of manufacturing facilities: The company’s manufacturing plants are strategically located near the Paradip Port in Odisha and the Vizag Port in Visakhapatnam, providing it with a logistical advantage for easy transportation. Furthermore, the proximity of Ferro Chrome producers, its primary customers within a 150-200 km radius of its plant at Baramana, Jajpur, Odisha, including the Kalinga Nagar Industrial Complex just 25 km away, which is India's largest steel hub, enhances its market reach. With this the company is concentrating on expanding the production capacity. The Coke manufactured by the company is used in Ferro Alloy Producers, allowing it a ready market.

Excellence in producing high-quality LAM Coke: The company’s excellence is consistently producing high-quality Low Ash Metallurgical (LAM) Coke. Over the years, it has established a reputation for delivering superior products that meet the stringent requirements of its customers, particularly in the ferro alloy and metallurgical industries. Its commitment to maintaining high production standards is further reinforced by its quality control laboratory, located within its manufacturing unit at Baramana, Jajpur, Odisha. This lab is specifically designed to ensure that its end products consistently meet the design specifications, size requirements, and quality standards demanded by each of its customers. With the equipped laboratory, it focuses on identifying and preventing defects, ensuring that every batch of LAM Coke meets its high-quality benchmarks.

Own fleet for Just-In-Time delivery: To ensure the efficient and timely delivery of its products, it has invested in its own fleet of transportation vehicles. This dedicated fleet is a key component of its logistics strategy, enabling it to provide Just-In-Time (JIT) delivery to its clients. Its fleet is specifically designed to meet the demands of its production schedules and customer requirements. By managing its own transportation, it can maintain proper control over the delivery process, ensuring that products are delivered promptly and reliably. This use of own fleet for transportation allows it to reduce lead times, minimize delays, and enhance overall customer satisfaction.

Risks and concerns

Maximum revenue comes from limited customers: The company derives a significant portion of its revenue from its customer, and focusing on catering them with its products is a part of its growth strategy. The company has garnered 86.28%, 86.53% and 77.18% of its total revenue from top 5 customers in FY25, FY24 and FY23 respectively. The company’s customers typically have no obligation to maintain or expand their business relationship with the company. If one or more of its customers terminate their dealings with it, whether for convenience, for default in the event of a breach by it, the company’s business and results of operations could be adversely affected.

Dependent on limited number of suppliers in handling business operations: The company’s operations are dependent on the supply of raw material i.e. coking coal, which it procures from domestic importers who specialize in importing high quality coking coal from different countries. The raw material is procured on the requirement of the clients’ quality standards. This helps the company to make the finished product as per the requirement of the clients. The company has procured 87.86%, 76.50% and 89.48% of raw material from top 5 suppliers in FY25, FY24 and FY23 respectively. The loss of any significant supplier may have an adverse effect on its business, operations, financial conditions and prospects.

Stiff competition: The company operates in a highly competitive industry, where numerous players are constantly vying for market share, and its ability to succeed is heavily dependent on its capacity to compete effectively. The competitive landscape is characterized by intense rivalry, not only from established companies with significant market presence and financial resources but also from emerging players who may bring innovative products, services, or business models to the market. Failure to compete effectively could have several adverse consequences for its business. Firstly, its market share could be eroded if customers choose to purchase from competitors who may offer similar or superior products at more attractive prices, or with better service and support. This could lead to a reduction in its sales volume, ultimately affecting its revenue and profitability.

Outlook

Nilachal Carbo Metalicks is engaged in the production of high-quality, low-sulfur metallurgical coke. Their product range includes nut coke, blast furnace coke, foundry coke, and low-phosphorus coke fines, catering to various industrial applications. The company has strategic location of manufacturing facilities. The company has excellence in producing high-quality LAM Coke. On the concern side, the company derives a significant portion of its revenues from a limited number of customers. The loss of any significant clients may have an adverse effect on its business, financial condition, results of operations, and prospects. Moreover, the company is heavily dependent on limited number of suppliers in handling its business operations. The loss of any significant supplier may have an adverse effect on its business, operations, financial conditions and prospects.

The company is coming out with an IPO of 66,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 85 per equity share to mobilize Rs 56.10 crore. On performance front, revenue from operations had decreased by 23.99%, from Rs 26,510.68 lakh in Fiscal 2024 to Rs 20,151.20 lakh in Fiscal 2025. Moreover, the company’s profit after tax had decreased by 11.39% from Rs 1,581.81 lakh in the Fiscal 2024 to Rs 1,401.57 lakh in Fiscal 2025.

The company’s strategy focuses on enhancing its current production facility to better meet customer demands and boost operational efficiency. As part of its expansion plan, the company will install one additional battery with 36 ovens, increasing its capacity by 34,400 MTPA. This expansion, coupled with investments in cutting-edge equipment and advanced automation technologies, will modernize its new expansion facility processes and improve product quality. By implementing lean manufacturing principles, it aims to streamline operations, reduce waste, and enhance productivity. Expanding production capacity and optimizing resource allocation will help it to meet rising demand, while strengthening its quality control measures will ensure that all products consistently meet its high standards. Additionally, it is committed to improving energy efficiency and sustainability by adopting energy-saving technologies and reducing emissions. This comprehensive enhancement strategy will maximize the potential of its facility, support long-term growth, and reinforce its leadership in the industry.