Bespoke Financials outlines working-capital options for steel manufacturers, traders, processors and exporters in FY 2026–27

India’s steel industry has continued to expand over the past three financial years, supported by infrastructure development, construction, railways, automobiles, renewable energy, defence manufacturing, engineering and capital expenditure. However, rising production and demand have not eliminated financial pressure.

Steel manufacturers, processors, traders and exporters continue to face delayed receivables, volatile raw-material prices, inventory risks, high energy costs, freight uncertainty, import competition, currency exposure and increasing expenditure on technology and decarbonisation.

The sector’s central financial challenge is a timing mismatch: companies must purchase raw materials, pay suppliers, fund production and arrange transportation well before customers settle invoices. As a result, a strong order book does not always translate into immediate liquidity.

Bespoke Financials states that working capital should be treated as an important growth capability for businesses operating across the Indian steel value chain during FY 2026–27.

Steel sector performance over the past three financial years

India’s steel industry recorded strong growth between FY 2023–24 and FY 2025–26.

According to Ministry of Steel data cited in the original material, crude steel production increased from approximately 144.3 million tonnes in FY 2023–24 to 152.2 million tonnes in FY 2024–25 and 168.4 million tonnes in FY 2025–26. Finished steel consumption increased from approximately 136.3 million tonnes to 152.1 million tonnes and then 163.7 million tonnes during the same period.

The Ministry of Steel also reported strong growth in finished steel exports during FY 2025–26, while imports declined, helping India regain net-exporter status. Total steel capacity was estimated at approximately 220 million tonnes, with policy support continuing for expansion toward 300 million tonnes by 2030–31.

These trends demonstrate the scale of India’s industrial opportunity while also increasing the amount of capital required to procure materials, hold inventory, operate plants, execute orders, meet export requirements and invest in future capabilities.

Working-capital challenges during FY 2023–24

FY 2023–24 was marked by strong domestic demand, infrastructure activity and increasing steel consumption. Construction and infrastructure remained important demand drivers, while automotive, engineering and capital goods also supported market activity.

Manufacturers and rolling mills needed to purchase iron ore, scrap, coking coal, sponge iron, billets, ferro-alloys, electrodes, refractories, zinc, nickel, fuel and other consumables. Such purchases could require immediate or advance payment, while customer collections were received later.

India was also a net importer of finished steel in FY 2023–24, according to Ministry of Steel data cited in the original material. Imports exceeding exports created additional competitive and inventory-related pressures for some domestic businesses.

Steel supplied to infrastructure contractors, engineering companies, government-linked projects and large industrial customers may also be subject to inspection, approvals, milestone billing, retention money and extended credit periods. These factors can increase receivable days and restrict the ability of smaller and mid-sized businesses to rotate working capital.

Working-capital challenges during FY 2024–25

The Indian steel sector expanded further during FY 2024–25. Crude steel production reached approximately 152.2 million tonnes, while finished steel consumption increased to approximately 152.1 million tonnes.

Steel prices remained sensitive to international benchmarks, domestic inventory, import offers, energy costs and customer purchasing behaviour. In some segments, selling prices may not have increased in line with raw-material, transportation and energy costs, putting pressure on margins.

India also continued to depend significantly on imported coking coal. Changes in international coal prices, freight rates, currency movements and availability can directly affect production costs and working-capital requirements.

Companies expanding capacity, adding processing lines, increasing warehouse inventory or entering new markets may require significant funds before the additional investment begins generating collections. Machinery advances, installation expenses, additional manpower, testing, certification and working inventory can all add to liquidity requirements.

Exporters also require financing for procurement, processing, inland transportation, port charges, freight, insurance, documentation and receivable realisation. Importers may require support for letters of credit, customs payments, imported raw materials and shipment-related obligations.

The move toward specialty steel and higher-value products can create additional requirements for equipment, technology, quality systems, skilled manpower, testing facilities and customer qualification.

Working-capital challenges during FY 2025–26

FY 2025–26 brought a substantial increase in production and consumption. According to the figures cited in the original material, crude steel production reached approximately 168.4 million tonnes and finished steel consumption approximately 163.7 million tonnes.

Higher volumes can increase procurement requirements, inventory levels, production expenses, freight payments and receivables. Businesses that expand sales without appropriately reviewing their working-capital limits may experience liquidity pressure even when their underlying operations remain profitable.

Energy, fuel, freight, insurance and compliance costs continue to influence steel-sector margins. Export growth can also increase the need to finance the period between procurement, production, shipment and payment realisation.

In addition, the European Union’s Carbon Border Adjustment Mechanism entered its definitive regime from 1 January 2026 and covers certain iron and steel imports. Indian exporters supplying covered products may therefore need stronger emissions measurement, reporting, verification and traceability systems.

Steel traders and downstream processors must also balance inventory availability against price risk. Holding too little stock can result in lost orders, while excessive inventory can block cash and expose the business to market-price declines.

Common working-capital challenges across the steel value chain

• Delayed receivables from infrastructure contractors, dealers and industrial customers.
• Inventory accumulation caused by price uncertainty or slower offtake.
• Higher raw-material procurement requirements.
• Margin pressure caused by volatile steel prices.
• Rising power, fuel, freight, insurance and compliance expenses.
• Customer demands for longer credit periods.
• Retention money and milestone-linked payments.
• Limited collateral for businesses seeking additional finance.
• Existing banking limits that may not match revenue growth.
• Export finance gaps between shipment and payment realisation.
• Currency exposure on imported inputs and overseas receivables.
• Capital expenditure for specialty steel and advanced processing.
• Funding requirements for carbon measurement and lower-emission production.
• Difficulty balancing debt repayment with continuous procurement requirements.

These pressures show why working capital is closely connected to production continuity, procurement strength, customer service, market expansion and profitability.

Working-capital facilities outlined by Bespoke Financials for FY 2026–27

Bespoke Financials has outlined a range of potential financial solutions for eligible steel manufacturers, traders, processors, service centres, fabricators and exporters. The appropriate facility would depend on the company’s financial profile, transaction structure, order visibility, customer quality, repayment capacity, documentation and operating cycle.

1. Non-asset-based working capital — up to ₹20 crore

This facility is described as supporting raw-material procurement, inventory holding, production expenses, receivables gaps, operating costs and confirmed-order execution.

It may be considered for businesses with established operations and credible business activity but limited unencumbered collateral. Actual availability would remain subject to assessment and approval.

2. Supply-chain finance without collateral — up to ₹50 crore

Supply-chain finance may support transactions between steel manufacturers, suppliers, distributors, processors, dealers and institutional buyers.

The proposed structure may be aligned with purchase orders, invoices, buyer relationships and transaction flows, subject to eligibility and applicable terms.

3. Procurement facility backed by bank guarantee — up to 270 days

A bank-guarantee-backed procurement facility may help eligible businesses manage supplier obligations and procure materials over a longer repayment period.

It may be relevant to manufacturers, rolling mills, traders and processors that regularly procure billets, scrap, coils, plates, ferro-alloys, coal or other inputs.

4. Export and import finance — up to US$5 million

Export and import finance may support the international transaction cycle, including raw-material procurement, pre-shipment production, freight and insurance, port and documentation expenses, letters of credit, customs-related payments and post-shipment receivables.

Such facilities are subject to transaction structure, applicable regulations, documentation and financing approval.

5. Traditional or quick capital

Traditional or quick capital may be considered for urgent procurement, confirmed orders, seasonal demand, logistics payments, emergency operating requirements and short-term business needs.

The repayment structure should be aligned with expected collections and the company’s actual cash-conversion cycle.

6. Working capital against negotiable instruments — up to ₹20 crore

Eligible companies may explore liquidity against negotiable instruments for periods extending up to ten months, subject to the nature of the instrument, counterparty quality and applicable financing terms.

7. Bullet-repayment working capital — up to ₹20 crore

For specific transactions, projects or export orders, a bullet-repayment structure may be considered where there is a clearly identifiable repayment event supported by appropriate documentation.

8. Emerging corporate finance — up to ₹15 crore

Fast-growing steel companies with established operations, improving performance and credible expansion plans may explore structured corporate finance for capacity enhancement, downstream processing, technology adoption, specialty products and growth-related working-capital requirements.

9. Equity-based working capital — ₹25 crore and above

Businesses requiring substantial liquidity for capacity expansion, strategic investments, technology upgrades or large-scale growth may consider equity-based solutions where appropriate.

10. Asset restructuring with additional working capital — ₹10 crore and above

Companies with existing asset-linked obligations may explore restructuring combined with additional working capital, subject to financial assessment and lender or investor approval.

How appropriate financial support may strengthen steel businesses

• Support strategic raw-material procurement.
• Maintain adequate inventory while managing cash flow.
• Execute larger infrastructure and industrial orders.
• Improve supplier-payment planning.
• Bridge eligible receivables from customers.
• Finance export transactions until payment realisation.
• Support investment in specialty steel and downstream processing.
• Meet technology, quality and certification requirements.
• Support emissions measurement and decarbonisation initiatives.
• Manage growth while maintaining repayment capacity.

The objective should not simply be to increase borrowing. Financing should be aligned with the commercial cycle so that liquidity supports sustainable growth, resilience and repayment capacity.

A strategic financial approach for FY 2026–27

Steel businesses should review their funding requirements before pursuing aggressive expansion. Management teams may assess procurement cycles, supplier-payment terms, inventory ageing, customer receivable days, exposure to project contractors, margin sensitivity, imported raw-material exposure, export payment cycles, existing banking limits, collateral availability and upcoming technology or decarbonisation investments.

Financial requirements differ across the steel value chain. A billet manufacturer, steel trader, rolling mill, fabricator, export house and specialty-steel processor will not necessarily have identical funding needs.

Bespoke Financials states that it focuses on understanding these differences and structuring financial solutions for eligible businesses.

Conclusion

India’s steel sector has demonstrated strong production and consumption growth during the past three financial years. Infrastructure development, manufacturing expansion, automotive demand, renewable energy, defence, railways and exports continue to create opportunities.

At the same time, steel companies face a demanding financial environment shaped by raw-material volatility, energy costs, freight uncertainty, import competition, delayed receivables, inventory risk, carbon-related requirements and technology investments.

For FY 2026–27, effective working-capital management is likely to remain an important competitive factor. Companies that can manage procurement, production, receivables, exports, inventory and investment requirements in a disciplined manner may be better positioned to pursue sustainable growth.

About Bespoke Financials

Bespoke Financials provides financial solutions for manufacturers, traders, processors, exporters, emerging corporates and growth-oriented businesses. Its stated offerings may include non-asset-based working capital, supply-chain finance, procurement finance, export-import finance, negotiable-instrument funding, emerging corporate finance, equity-based working capital and asset restructuring with additional liquidity.

Disclaimer: The facilities, limits and structures described above are based on the information provided by Bespoke Financials and should not be understood as guaranteed approvals or offers of finance. Actual availability, amount, pricing, security, tenure, eligibility and repayment terms are subject to financial assessment, documentation, applicable regulations and approval by the relevant financing institution or provider. Readers should independently verify current product terms and regulatory requirements before making financial decisions.