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Tuesday, 10 May 2022

Venus Pipes & Tubes

SS pipes and tubes manufacturer

Expanding installed capacity from 900 tonne per month to 2,000 tonne per month

Incorporated in 2015 by MegharamSagramji Choudhary, Mr. Dhruv Mahendrakumar Patel, Mr. Jayantiram Motiram Choudhary and Arun Axaykumar Kothari, Venus Pipes & Tubes is a pipes and tubes manufacturer with the sole focus on manufacturing of welded and seamless pipes in a single metal category, i.e., stainless steel (SS).  

The company manufactures stainless steel tubular products in two broad categories - seamless tubes/pipes and welded tubes/pipes. The company is currently manufacturing 5 product lines, namely - stainless steel high precision & heat exchanger tubes, stainless steel hydraulic & instrumentation tubes, stainless steel seamless pipes, stainless steel welded pipes and stainless-steel box pipes.  

The company supplies its products under “Venus” brand name for applications in diverse sectors including - chemicals, engineering, fertilizers, pharmaceuticals, power, food processing, paper, and oil and gas. 

The company has one manufacturing plant which is strategically located at Bhuj-Bhachau highway, Dhaneti (Kutch, Gujarat) which is in near, around 55 kilometers and 75 km from the ports of Kandla and Mundra, respectively, that helps it in reducing logistic costs on procurement of raw materials and imports and export of products. The manufacturing facility has separate seamless and welded divisions with latest product-specific equipment and machineries.  

As of February 28, 2022, total installed capacity of the company is 10,800 tonne per annum. Further, it has a storage facility at manufacturing facility for the purposes of holding inventories of raw material as well as finished products, in addition to a warehouse facility located at Ahmedabad, which ensures stability of operations. 

Basic raw material required by the company includes stainless steel coils and hollow pipes. The company procures raw materials based on market availability, pricing and quality through three main channels - domestic suppliers such as steel manufacturers, stockists and traders, international suppliers from China, Indonesia, Malaysia and Singapore and high sea purchases.  

The cost of materials consumed (including purchase of stock in trade and changes in inventory) in operations accounted for 82.09%, 84.53%, 88.29% and 85.58% of its revenue from operations for the nine-month period ended December 31, 2021, and fiscals 2021, 2020 and 2019, respectively. 

The company sells products both in the domestic as well as the international markets. In the domestic market, it sells products to customers as well as traders/stockists while in the international market it supplies products through traders/stockists and authorized distributors. The company started exporting its products in the year 2017 and as on February 28, 2022, it hads exported to 20 countries including Brazil, UK, Israel and countries in the European Union.  

The revenues from exports aggregated to Rs 26.41 crore, Rs 14.80 crore, Rs 6.01 crore and Rs 13.40 crore for the nine-month period ended December 31, 2021 and fiscals 2021, 2020 and 2019, respectively, and as a percentage of revenue from operations, were 9.54%, 4.78%, 3.38% and 11.28%, respectively. 

The company is ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, certified by Bureau Veritas and holding accreditation from UK Accreditation Service. Further, its products sold to the European market are certified under PED 2014/68/EU and ADW/AD 2000 Merkblatt, W0 from TUV which is a requirement for supply in the European Union countries. Further, it is an IBR certified manufacturer and supplier of stainless steel seamless and welded pipes/tubes. 

The company has an in-house quality team comprising of 27 dedicated personnel working under the overall supervision of board of directors. Its quality control team ensures that raw materials as well as end products are tested on all quality parameters to ensure that it is compliant with the international product standards. 

Capacity utilization for the nine-month period ended December 2021 for seamless pipe was 90.3% while for welded pipe was 92.88% 

The Offer and the Objects 

The offer comprises fresh issue of 5074100 equity shares aggregating up to Rs 165.4 crore at upper price band of Rs 326 and Rs 157.3 crore at lower price band of Rs 310  

The price band for the IPO is Rs 310 to Rs 326 per equity share of face value Rs 10 each. 

The company proposes to utilize the net proceeds from the issue towards financing the project cost towards capacity expansion, technological upgradation, cost optimization of operations and support to the manufacturing facility and backward integration for manufacturing of hollow pipes amounting Rs 107.945 crore, to meet long-term working capital requirements amounting Rs 25 crore and balance towards general corporate purposes 

The company currently has one manufacturing facility at Dhaneti, Kutch which has a total installed capacity of 10,800 tonne per annum as of February 28, 2022. It currently manufactures welded pipes/tubes up to size 6 mm - 219.3 mm and seamless pipes/tubes up to size of 6 mm - 114.3 mm diameters at its manufacturing facility.  

The company proposes to increase the installed capacity of manufacturing facility to 2,000 tonne per month which will also enable it to increase production capacity and product offerings by manufacturing pipes and tubes of multiple sizes, including higher diameter welded pipes/tubes up to 1.219.2 mm and seamless pipes/tubes up to 168.3 mm.  

Towards this end, it plans to install LSAW (A358) plant which will increase production capacity from 600 tonnes per month to 1200 tonnes per month of welded pipes/tubes by manufacturing higher diameter welded pipes. Further, it plans to install a pilger plant to increase production capacity from 300 tonnes per month to 800 tonnes per month of higher diameter seamless pipes/tubes. 

The company also plans to acquire a slitting machine for the purposes of cutting steel strips/coils as per the desired width which is required for backend manufacturing process of welded pipes. This shall lead to reasonable cost savings, as currently, cutting of steel strips and coils is outsourced by the company. 

Further, with increase in production capacity, it intends to set up an additional effluent treatment plant, along with existing effluent treatment plant, to ensure compliance with the applicable pollution norms. Also, as a part of its technological advancement strategy, it plans to set up an acid regeneration plant which shall reduce raw acid usage and chemicals in the neutralization plant, with a consequent reduction in the landfill produced.  

It intends to procure additional machines like bevelling machines, and cranes to enhance/support production capabilities to service customer requirements. The setting-up of the ARP shall lead to enhancement in productivity, reducing the down time for dumping and cleaning of sludge-filled pickling tanks. 

The basic raw material for manufacturing seamless pipe is hollow pipe which it procures from open market. The company plans to install a piercing plant with a capacity of 800 tonne per month for in-house manufacturing of hollow pipes as its backward integration strategy. With the setting-up of the piercing plant, it shall be able to produce hollow pipes from stainless steel round bars. 

The fund requirements for all objects are proposed to be entirely funded from the net proceeds and internal accruals. The company expects commercial commencement of the projects from March 2023 


The global SS (stainless steel) pipe and tube industry is around 23% of the global pipe and tube industry. It is estimated to grow at 4% CAGR to reach Rs 4000 crore by FY25. The oil and gas industry is among the major consumers for SS pipes and tubes. These are used for transportation of gas and liquids as well as for upstream, midstream, and downstream processing of crude oil. 

Per capita consumption of steel pipes & tubes in India is less than half of the global average (21-22 kg PCC) at 10 kg and about one fifth of the Chinese (55-60 kg PCC) which indicates huge opportunities for growing penetration of steel pipes & tubes in the Indian market. 

India remains a net importer of SS pipes and tubes. China is the largest exporter of SS pipes and tubes to India and accounted for nearly 54% of India’s total imports in FY21. Chinese Government, on April 28, 2021, cancelled the export rebates on several steel products including welded and seamless steel pipes with effect from May 1, 2021, which is expected to benefit domestic pipes and tubes manufacturers in India. 

The companys products are used in industries like pharmaceuticals, food processing, etc. The Government of India has announced production linked incentive (PLI) schemes for boosting the domestic manufacturing in pharmaceuticals and food processing sectors, which shall have a consequent positive impact on order book. 

The Government of India has decided to disallow international/global tenders in government procurement tenders up to the value of Rs 200 crore. Such a move shall boost the demand for indigenously manufactured products in steel sector. Further, the public sector undertakings restricting local traders of foreign pipe manufacturers for participation in their tenders shall encourage the growth of domestic players in the Indian market. 

On May 8, 2017, the Government of India released a domestically manufactured iron and steel products policy (DMISP) to prefer the domestically manufactured iron and steel products in government procurement. To align with the governments Atmanirbhar Bharat scheme, the ministry of steel has notified amendments to the DMISP Policy in December, 2020, whereby the amended policy further broadened the scope of the policy to promote domestic manufacturing in the steel sector.  

It is likely that these policy initiatives would give push to domestic manufacturing and strengthen the supply side dynamics along with supporting a favorable demand scenario from the various end user industries. 

A substantial investment worth Rs 111 trillion planned under National Infrastructure Pipeline and other sector specific policies reforms is expected to support steel pipes and tubes demand from major end user industries. 

Domestic SS pipes and tube industry is expected to grow from about 1.1 million tonne currently to 1.6 million tonne by 2026, growing at CAGR 8.5% 


The primary raw material for the company is raw steel whose prices are very volatile in nature. This adversely affects the pricing capability and the operating costs for the company. The effect can be seen across the industry, as the Ebitda margins can vary year on year cutting the profitability of the company 

The company is in the business of manufacturing of SS pipes/tubes since approximately six years whereas its peer group industry players have the benefit of longer operating history in comparison with the company, and therefore, its brand development is at a relatively nascent stage. 

The industry constituting of steel pipes and manufacturing is highly fragmented and has very low entry barrier which makes it a very competitive industry. Both organized as well as the unorganized players are competing for the market share. This tends to reduce the pricing capability of the company as the market decides the price of the product. 

The company is required to obtain consents under certain environmental laws, which are critical for operating manufacturing Facility. The company has in the past been non-compliant with the requirements under environmental law for its operations  

The company commenced commercial operations in the calendar year 2015 and is a fairly new player in the SS pipes and tubes market. Companies in their initial stages of growth present substantial business and financial risks and may present comparatively higher investment risks than seasoned market players. 

The demand in the steel and steel products industry is volatile and a decrease in demand of steel may have a material adverse effect on business, results of operations, prospects and financial condition. 

The company is subject to various government regulations and if it fails to obtain, maintain or renew statutory and regulatory licenses, permits and approvals required to operate business, its business, results of operations and cash flows may be adversely affected. 


For FY 2021, consolidated sales were up by 74% to Rs 309.33 crore. OPM rose 470 bps to 11.2% which led to 199% increase in operating profit to Rs 34.78 crore. Other income increased 78% to Rs 2.7 crore while interest cost rose 22% to Rs 5.56 crore and depreciation decreased 54% to Rs 97 lakh. PBT increased 377% to Rs 31.7 crore. Tax expenses were 10% higher at Rs 7.32 crore. Net profit increased 473% to Rs 23.63 crore. 

At the higher price band of Rs 326, the offer is made at around 28 times its EPS of Rs 11.6 for the period ended March 31, 2021, on a post-issue equity share capital of Rs 20.3 crore of face value of Rs 10 each. Listed industry peer of the company is Jindal Saw and Ratnamani metals and Tubes. 

As of 10 May 2022, its listed peers such as Jindal Saw trade at 8.7 times its FY2021 EPS of Rs 10.0 at the current market price of Rs 87.4 and Ratnamani metal and Tubes trades at 37 times its FY2021 EPS of Rs 59.1 at the current market price of Rs 2178.  For FY2021, Venus Pipes & Tubes OPM and ROE stood at 11.2% and 59.2%, respectively compared to 13.6% and 4.8% for Jindal Saw and 19.3% and 14.9% for Ratnamani metal and Tubes respectively.


Venus pipes & Tubes: Issue Highlights 

Fresh issue  (in number of shares) 


Fresh issue  (in Rs Crore) 


 - in Upper price band 


 - in Lower price band 


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Venus Pipes & Tubes: Consolidated Financials 


1903 (12) 

2003 (12) 

2103 (12) 

2109 (09) 

Total Income 










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*EPS annualized on post issue equity capital of Rs 20.3 crore of face value of Rs 10 .each  

# Not annualised due to seasonality of business 

Figures in Rs crore 

Source: Capitaline Corporate Database