Chaman Metallics plans Rs 100 crore rights issue to cut debt

Chaman Metallics Limited plans a Rs 100 crore rights issue to repay borrowings of Rs 481.4071 crore reported on September 30, 2026, after borrowings increased from Rs 440.4581 crore at March 31. Management estimates the proposed repayment could lower finance costs by Rs 6 crore to Rs 9 crore, while pricing and other terms await a board decision.

Why is Chaman Metallics raising Rs 100 crore?

Chaman Metallics is raising Rs 100 crore through a board-approved rights issue, with the proceeds proposed for repayment of borrowings. The H1 FY'27 investor presentation says the board will decide the pricing and other terms, but does not disclose an issue price, entitlement ratio, record date, number of shares or timetable.

Management estimates finance-cost savings of Rs 6 crore to Rs 9 crore from the proposed debt repayment. That estimate is not a reported outcome, and the presentation does not identify the borrowings to be repaid, their interest rates, or the date from which any savings would start.

The proposed Rs 100 crore raise is equivalent to about 20.8% of borrowings of Rs 481.4071 crore at September 30, 2026. The presentation says the proposed issue would strengthen the capital structure, although the eventual debt reduction will depend on the final issue terms and amount raised.

How did Chaman Metallics' borrowings change by September 2026?

Chaman Metallics' borrowings increased by Rs 40.949 crore to Rs 481.4071 crore at September 30, 2026, from Rs 440.4581 crore at March 31, 2026. Over the same dates, total assets rose by Rs 31.6174 crore to Rs 675.8513 crore and shareholders' funds increased by Rs 11.9157 crore to Rs 107.161 crore.

Fixed assets, including capital work in progress, rose by Rs 10.2105 crore, while inventories increased by Rs 28.2166 crore between March and September 2026. Trade receivables declined by Rs 3.6156 crore to Rs 5.647 crore, current liabilities fell by Rs 26.0215 crore to Rs 5.0304 crore, and trade payables changed marginally to Rs 69.3606 crore from Rs 69.2442 crore.

The balance-sheet movement followed completion of a 30 megawatt captive power plant in FY26. Chaman Metallics describes the atmospheric fluidized bed combustion and waste-heat-based plant as having an effective cost of Rs 3.54 per unit, compared with Rs 8.44 per unit for grid power, and meeting 99.9% of plant power requirements.

What does Chaman Metallics' cash flow show about debt repayment?

Chaman Metallics reported operating cash flow of Rs 2.6609 crore in the column dated September 30, 2026, as a Rs 44.0961 crore working-capital outflow largely absorbed Rs 47.6387 crore of operating profit before working-capital changes. In the March 31, 2026 column, operating cash flow was Rs 46.3594 crore, supported by a Rs 12.4264 crore working-capital inflow.

Taxes paid were Rs 88.17 lakh in the September 30, 2026 column, compared with Rs 3.5578 crore at March 31, 2026. The September column also records Rs 20.8839 crore of dividends or interest paid and a net cash decrease of Rs 4.69 lakh, while the March column records a Rs 8.31 lakh increase in cash.

The cash-flow statement provides the disclosed context for the planned repayment because operating profit was positive but working capital limited cash generated from operations in the September column. Chaman Metallics does not identify the individual inventory, creditor or other current-asset movements that made up the Rs 44.0961 crore working-capital outflow.

How did Chaman Metallics perform in H1 2026-27?

Chaman Metallics reported revenue from operations of Rs 376.5788 crore in H1 2026-27, compared with Rs 196.5175 crore in H1 2025-26, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose to Rs 47.5669 crore from Rs 11.9397 crore. Revenue and EBITDA were also higher than Rs 344.7478 crore and Rs 28.0218 crore, respectively, in H2 2025-26.

Profit after tax was Rs 11.9159 crore in H1 2026-27, compared with losses of Rs 2.5519 crore in H1 2025-26 and Rs 1.6223 crore in H2 2025-26. Finance cost rose to Rs 20.8839 crore from Rs 10.7915 crore a year earlier, while earnings per share moved to Rs 4.94 from a loss per share of Rs 1.06.

Return on capital employed was 7.65% in H1 FY 26-27, versus 5.78% in FY 25-26, and return on equity was 11.12%, compared with negative 4.38%. The presentation associates the earlier period with an expansion phase that added 550 tonnes per day of sponge iron, 400 tonnes per day of billets, 65 tonnes per day of silico manganese and a 30 megawatt captive power plant.

What rights issue details has Chaman Metallics not disclosed?

Chaman Metallics has not disclosed the rights-issue price, entitlement ratio, record date, issue size in shares, closing date or completion date for the Rs 100 crore proposal. The presentation states that the board has approved the fund raising and will decide pricing and other terms.

Management's Rs 6 crore to Rs 9 crore estimate for finance-cost savings depends on the final proceeds and repayment execution. The presentation does not state whether the full Rs 100 crore would be realised, the timing of subscription proceeds, or the specific debt facilities that would be repaid.

The reported capital structure provides the starting point for judging the transaction once terms are announced. Paid-up equity share capital was Rs 24.1348 crore in H1 2026-27, H2 2025-26 and H1 2025-26, while shareholders' funds were Rs 107.161 crore at September 30, 2026.

Conclusion

Chaman Metallics is linking a proposed Rs 100 crore equity raise directly to repayment of borrowings that rose to Rs 481.4071 crore by September 30, 2026. The presentation shows improved H1 2026-27 revenue of Rs 376.5788 crore, EBITDA of Rs 47.5669 crore and profit after tax of Rs 11.9159 crore, but also records a Rs 44.0961 crore working-capital outflow in the September cash-flow column.

The next disclosed step is the board's decision on pricing and other rights-issue terms. Investors can then assess the number of new shares, subscription outcome, debt repaid and whether management's estimated Rs 6 crore to Rs 9 crore finance-cost savings emerge after the proposed use of proceeds.