Detailed Narrative
Financial Performance Overview
Krishca Strapping Solutions delivered a strong financial performance in FY25, with revenue growing 43% year-on-year to ₹151.08 crores. EBITDA also saw a significant increase of 20% year-on-year, reaching ₹24.29 crores, reflecting the stability of the business model. However, operating margins for the year were around 15%, experiencing pressure primarily from export market dynamics.
Strategic Investments and Diversification
The company is actively pursuing strategic investments, with its new Cold Rolling Complex (CRC) project on track. ₹40 crores has already been spent on CAPEX for the CRC, with another ₹40 crores expected, and production is anticipated to commence by Q4 FY26. Krishca is also diversifying its product portfolio into other packaging materials like desiccants, tarpaulins, HDPE, airbags, and VCI-based corrosion protection products, with a desiccant plant already operational and two more small investments expected by H1.
Order Book and Growth Outlook
Krishca has secured a robust packaging contract order book, totaling ₹50.79 crores for FY26 and ₹120.89 crores for the next three years, providing strong revenue visibility. The company expects revenue to grow by 25% in FY26 and aims to maintain operating margins at a minimum of 15%. A significant pipeline of ₹700 crores in potential orders is currently being pursued, with management expecting closure of large audits in June/July.
Margin Dynamics and Export Challenges
Operating margins faced pressure in FY25, dropping to 15%, largely due to lower margins from exports. This was attributed to Chinese steel dumping in key markets like the Middle East, leading to a $100 margin contraction. While the company is focusing on increasing its share of primary packaging in exports to mitigate this, it remains confident in India's domestic market protection against similar dumping.
Working Capital Management
The company experienced increased inventory and debtor days at the end of FY25. This was explained by strategic stocking for new contracts, taking advantage of lower steel prices in Q4 FY24, and receivables from trial orders. Management anticipates an improvement in working capital efficiency with the operationalization of the CRC and normalization of operations, targeting an ideal of 90 working capital days and 45 inventory days post-cold mill.
Capacity Expansion and Utilization
Overall capacity utilization for FY25 stood at 60%, with Unit-1 operating at 80% and Unit-2 at an implied 45-50%. The company projects overall utilization to increase to 75% in FY26. The new CRC will have a capacity of 5,000 tons per month, with 20% allocated for captive consumption and an expected 35-40% utilization by the end of its first year of operation.