Krishca Strapping Solutions Ltd Management Discussions

Economic Overview

Global Economy

The global economy exhibited notable resilience in 2024, rebounding from a period of s ignifi cant disruption. While global GDP expanded by 3.3%, this growth was not evenly distributed. Advanced economies experienced a modest increase of 1.8%, contrasting with a more robust 4.3% expansion in emerging markets and developing economies.

In fiat ionary pressures began to subside, with projections indicating a decline to 4.3% in 2025. This trend is largely attributed to global monetary tightening measures.

Moving into 2025, the economic outlook remains cautiously optimistic. While persistent geopolitical uncertainty and ongoing structural transitions are expected to moderate growth, the stabilisation of inflation and potential for gradual monetary easing in advanced economies may provide a foundation for continued recovery.

Indian Economy

Indias economy continued its robust growth trajectory in FY 2024-25, supported by strong domestic demand and steady investment momentum. Real GDP is estimated to have expanded by 6.5% during the year, while Nominal GDP registered a growth of 9.8%, reflect ing a healthy pace of expansion despite global uncertainties. The growth momentum was particularly pronounced in the final quarter of the year, with Real GDP growing at 7.4% and Nominal GDP at 10.8%, underscoring resilience across sectors.

Sectoral performance was marked by impressive gains in construction and services. The construction sector recorded the highest growth of 9.4% in FY 2024-25, driven by infrastructure development and urban expansion, while public administration, defence and other services grew by 8.9%, and finan cial, real estate and professional services expanded by 7.2%. In Q4 alone, construction surged by 10.8%, followed by 8.7% growth in public administration, defence and other services, and 7.8% growth in finan cial and professional services, indicating sustained demand and government-led spending in priority areas.

The primary sector also demonstrated an encouraging recovery, registering a 4.4% growth rate in FY 2024-25, a notable improvement from 2.7% in the previous year. Growth in the sector was particularly strong in the fourth quarter at 5.0%, compared to just 0.8% in the same period of the previous fiscal year, reflect ing improved agricultural output and allied activities.

On the expenditure side, Private Final Consumption Expenditure (PFCE) rose by 7.2% during FY 2024-25, up from 5.6% in the previous year, highlighting robust consumer demand. Investment activity also remained buoyant, with Gross Fixed Capital Formation (GFCF) expanding by 7.1% for the full year and accelerating to 9.4% in Q4, supported by both private and public capital spending.

Looking forward, India continues to stand out as one of the worlds most dynamic growth engines. The IMF projects the economy to expand by 6.4% in FY 2025?€“26, almost twice the pace of advanced economies. With inflation expected to stay moderate and investment momentum strengthening, the outlook remains positive. The next phase of growth is likely to be driven by resilient domestic consumption, an expanding manufacturing base, and digitally enabled service exports, even as the economy navigates challenges from global protectionist trends and finan cial market volatility.

Industry Overview

Steel Industry

Global

The global steel industry in 2024 experienced a slight decline in crude steel production, with a 0.9% year-on-year decrease, reaching 1.839 billion tonnes. This downturn was largely in fluenc ed by economic uncertainties, particularly in key consuming sectors such as construction and automotive. However, regional performance varied s ignifi cantly. While China, the worlds largest producer, saw a 1.7% drop in output, other nations like India and Turkey demonstrated robust growth, with increases of 6.3% and 9.4% respectively.

The industry continues to be shaped by critical trends including the push for decarbonisation and the adoption of advanced technologies like AI and the Internet of Things (IoT) to improve operational efficien cy and sustainability. Global overcapacity, particularly in Asia, remains a s ignifi cant challenge, leading to distorted trade flow s and heightened protectionist measures like tariffs and anti-dumping cases.

Looking ahead to 2025 and beyond, the global steel market is expected to face continued headwinds from persistent economic challenges, although a modest recovery in demand is projected for 2026. Global steel consumption is forecast to grow slowly, with divergent regional trends. Demand is anticipated to be sluggish in the OECD area and decline in China due to shifts in its economy, while emerging markets in Southeast Asia and the Middle East and North Africa (MENA) are poised for strong growth, driven by urbanisation and infrastructure projects. The industrys future is heavily tied to its ability to address the environmental imperative, with green steel production methods, such as those using hydrogen and electric arc furnaces (EAFs), gaining increasing importance.

https://gmk.center/en/news/global-steel-production-fell-by-0-9-y-y-in-2024/#:~:text=Steel%20production%20 in%2071%20countries,by%20the%20 World%20Steel%20Association. https://www.oecd.org/content/dam/oecd/ en/publications/reports/2025/05/oecd-steel-outlook-2025_bf2b6109/28b61a5e-en.pdf

Indian

The Indian steel industry had a strong fiscal year 2025, cementing its role as a global leader in production and consumption. Despite global economic challenges, the domestic steel sector showed impressive resilience and growth, driven by strong internal demand and government initiatives. Domestic steel consumption grew by approximately 9-10%, fuelled by s ignifi cant government spending on infrastructure projects like roads, railways, and ports, and continued demand from the housing and real estate sectors. This growth rate, as noted by ICRA, highlights India as a major driver of global steel demand.

India maintained its position as the worlds second-largest crude steel producer. Production levels saw a notable increase, with crude steel production estimated at 137.96 million tonnes (MT) and finish ed steel at 132.57 MT for the April-February period of FY2025. This was supported by a record 15.6 million tonnes per annum (MTPA) in new capacity additions.

However, India remained a net importer of finish ed steel, a trend that continued from the previous year. Imports of finish ed steel rose by over 20% to 7.42 MT, while exports declined. This was largely due to competitively priced imports from countries with free trade agreements. The Directorate General of Trade Remedies (DGTR) recommended a provisional safeguard duty to protect domestic producers from this import surge.

Raw material costs were a mixed bag. While iron ore prices fluct uated, a moderation in coking coal prices, a key raw material, helped support the p rofit ability of steelmakers, despite a downward trend in steel prices. This reduction in input costs contributed to an improvement in industry earnings, particularly in the first half of the fiscal year.

Government policies were instrumental in the industrys performance. The National Steel Policy, 2017, and the Production Linked Incentive (PLI) Scheme for Specialty Steel (PLI 1.1), launched in January 2025, encouraged domestic manufacturing and attracted capital investment. The PM-Gati Shakti National Master Plan also played a crucial role by boosting infrastructure development and, in turn, steel consumption.

The outlook for the Indian steel industry remains positive and growth-oriented for the foreseeable future. The sector is expected to continue its upward trajectory, driven by strong domestic fundamentals and ongoing government support. Steel demand is projected to remain robust, with a continued focus on government-led infrastructure projects, urban development, and housing. The long-term vision of "Viksit Bharat" and the countrys goal of becoming a global manufacturing hub will serve as a powerful catalyst for steel consumption.

Steel strapping Industry

Global

Steel strapping is a packaging material designed to secure and stabilise goods during storage and transportation. Manufactured from high-tensile steel, it is valued for its exceptional strength, durability, and ability to handle heavy loads.

The key product types include blue-tempered steel strapping, paint-coated steel strapping, galvanised steel strapping, and others. Blue-tempered strapping, in particular, is produced by heating steel to high temperatures and rapidly cooling it, which results in a durable blue oxide finish . Depending on application needs, steel strapping is available in regular duty and high-tensile grades, and is widely used across industries such as metals, paper, glass, construction, and more.

The global steel strapping market has witnessed strong growth in recent years, expanding from $1.18 billion in 2024 to an estimated $1.26 billion in 2025, reflect ing a CAGR of 7.2%. This momentum in the historical period has been driven by industrial expansion, growing transportation networks, packaging innovations, stricter workplace safety standards, and rising environmental awareness. Looking ahead, the market is projected to continue its upward trajectory, reaching $1.71 billion by 2029 at a CAGR of 7.9%. Growth during the forecast period will be shaped by evolving environmental regulations, advancements in technology, supply chain volatility, fluct uating demand, and cost optimisation pressures.

Key trends expected to in fluenc e the industry include enhanced corrosion-resistant strapping, integration of smart monitoring systems, development of eco-friendly alternatives, tailored solutions for diverse end-use applications, and increased adoption of automation and robotics in packaging and material handling.

Indian

The Indian steel strapping industry, an integral segment of the packaging sector, continued to expand in FY2025, supported by strong growth in manufacturing, construction, logistics, and infrastructure. Steel strapping, known for its durability, high tensile strength, and ability to secure heavy loads, is widely used in steel, cement, automotive, and allied industries.

Market Drivers

Robust Steel and Metal Production: Indias crude steel output touched 143+ million tonnes in FY2024-25. Higher output of steel coils, billets, and pipes directly increases demand for steel strapping, which is essential for securing heavy and bulk loads.

Infrastructure and Construction Growth: The Government of Indias infrastructure push under Gati Shakti, National Infrastructure Pipeline (NIP), and real estate expansion are fuelling steel, cement, and allied industries; major users of steel strapping.

Expansion of Logistics and Transportation: With Indias logistics market expected to grow at 8?€“10% CAGR through 2030, the need for safe packaging during long-haul transportation boosts demand for high-strength strapping.

Rising Exports of Steel and Industrial Goods: Growth in exports of steel, automotive components, and engineering goods is increasing the requirement for secure packaging to meet international safety and quality norms.

Preference for Durable & Recyclable Packaging: Steel strapping is 100% recyclable, aligning with Indias sustainability and circular economy initiatives, giving it an edge over plastic alternatives in heavy-duty applications.

Growth of Manufacturing & Industrial Base: Expanding capacity in sectors such as automotive, shipbuilding, heavy machinery, and cement continues to strengthen strapping demand.

Rising Urbanisation: As more of Indias population moves to urban centres, there is a corresponding increase in demand for housing, commercial spaces, and urban infrastructure.

Booming E-commerce: The rapid growth of the e-commerce sector in India has led to a massive increase in the volume of goods being shipped and delivered.

Expansion of the Manufacturing Sector: Indias push to become a global manufacturing hub through initiatives like "Make in India" is a major catalyst. As manufacturing output increases across various sectors, the need for reliable and durable packaging solutions to secure goods for transport also rises. Steel strapping is the preferred choice for securing heavy and bulky loads, making it indispensable for these industries.

Business Overview

Founded in December 2017 and headquartered in Chennai, Tamil Nadu, Krishca Strapping Solutions Limited has rapidly evolved from a promising startup into a frontrunner in Indias steel strapping sector. The company commenced its commercial operations in March 2020 and has since carved out a strong position as a trusted manufacturer and distributor of High Tensile Steel Straps, Strapping Seals, and Strapping Tools.

Krishca distinguishes itself as a pioneer, being the first in India to implement a lead-free and eco-conscious heat treatment process for steel strapping. This green manufacturing initiative, coupled with advanced technology, underscores the companys commitment to sustainability while giving it a decisive edge in the marketplace.

With a strategically located state-of-the-art facility in Chennai, Krishca ensures efficien cy, consistency, and excellence in every product delivered.

Key Strengths and Offering s

l High Tensile Steel Straps: Engineered to comply with global benchmarks such as IS 5872:1990, ASTM D-3953, and BS EN 13246:2001, Krishcas straps are built to deliver superior strength and durability; critical for reliable packaging and transportation. l Precision Strapping Seals: The company manufactures high-quality strapping seals that guarantee secure fastening and safety during shipment. l Advanced Strapping Tools: A wide portfolio of strapping tools complements its product line, enabling seamless application and tightening of straps for industrial packaging needs. l Sustainable Production Practices: Krishca leads the way with its eco-friendly, lead-free, and energy-e_cient production line, designed to minimise waste and lower environmental footprint. l Integrated Manufacturing Facility: With a robust annual capacity of 18,000 MT of steel straps and 80 million strapping seals, the Chennai plant is equipped with cutting-edge technology and managed by skilled professionals to ensure operational excellence. l Commitment to Quality: Quality is embedded in every stage of production, backed by advanced labs, real-time testing, and traceability systems. Krishcas operations adhere strictly to ISO 9001:2015 standards, assuring reliability and consistency. l Innovation with Customer-Centricity: The company places strong emphasis on innovation, offer ing tailor-made packaging solutions with flex ibility in design, branding, and colour options to meet diverse customer needs. l Comprehensive Industrial Packaging Solutions: Krishca serves a wide range of industries, including steel, construction, and logistics; delivering complete packaging solutions that balance functionality, safety, and customisation.

Financial & Operational Performance

Despite a challenging external environment marked by lower steel production and muted infrastructure activity, the Company delivered a healthy performance, reflect ing its resilience and strong operational fundamentals.

Revenue grew 43% to _151.1 crore (_105.7 crore in FY24), with EBITDA rising to _24.4 crore (_20.3 crore). However, higher finan ce and depreciation costs compressed margins. EBITDA margin declined to 16.1% (19.2%) and PAT fell to _11.6 crore (_13.2 crore), with PAT margin at 7.7% (12.5%).

Net worth strengthened sharply to _102.7 crore (_39.1 crore), aided by reserves and equity infusion, while the Current Ratio improved to 1.78 (1.48). Despite sales growth, ratios reflect higher capital intensity, returns (ROE, ROCE) moderated, working capital cycles elongated (inventory and receivables turnover declined), and finan ce costs pulled down coverage.

Overall, FY25 was a year of strong scale-up backed by capital infusion, but p rofit ability and efficien cy were impacted by higher leverage and stretched working capital.

Ratio	31-Mar-25	31-Mar-24	% Variance	Reason for Variation
Current Ratio	1.23	1.48	\u2193 17%	Higher short-term borrowings and other current liabilities in FY25 led to tighter liquidity.
Debt-Equity Ratio	0.33	0.52	\u2193 37%	Equity base strengthened due to higher reserves & fresh warrant proceeds; borrowings rose but equity increased faster.
Debt Service Coverage Ratio	5.56	16.03	\u2193 65%	Finance costs (_370 cr vs _126 cr) and borrowings increased sharply, reducing coverage despite higher EBITDA.
Return on Equity Ratio	11.5%	34%	\u2193 66%	S ignifi cant increase in reserves & equity base diluted return, despite steady PAT.
Inventory Turnover Ratio	3.1	8.8	\u2193 65%	Inventory almost doubled in FY25 (_2,829 cr vs _1,313 cr), reducing turnover efficien cy.
Trade Receivables Turnover Ratio	3.9	5.9	\u2193 34%	Sharp increase in receivables outstanding (_4,161 cr vs _2,374 cr) slowed collections cycle.
Trade Payables Turnover Ratio	6.6	7.2	\u2193 8%	Payables remained high relative to purchases; marginal slowdown in creditor turnover.
Net Capital Turnover Ratio	2.6	2.0	\u2193 30%	Higher utilization of working capital efficien cy due to strong sales growth (45%).
Net P rofit Ratio	7.9%	12.7%	\u2193 38%	Finance cost & depreciation increase reduced margins despite revenue growth.
Return on Capital Employed	14.5%	32%	\u2193 55%	Capital employed increased s ignifi cantly (new equity & borrowings), while EBIT remained broadly fiat .

Opportunity & Threats

Opportunities l Growing Demand for Industrial Packaging: Rapid expansion in steel, construction, automotive, and logistics industries is driving higher demand for reliable strapping solutions, positioning Krishca to capture market share.

l Shift Towards Sustainable Packaging: With industries and governments emphasising eco-friendly practices, Krishcas lead-free, energy-e_cient production line provides a strong first -mover advantage in the sustainable packaging space.

l Export Market Expansion: Compliance with international standards (ASTM, BS EN, IS) opens opportunities in global markets, especially in regions with growing infrastructure investments.

l Rising Infrastructure & Manufacturing Investments in India: Government initiatives such as Make in India and large-scale infrastructure projects are expected to boost demand for industrial packaging solutions.

l Product D iversifi cation & Value-Added Solutions: Opportunities exist to broaden product offer ings, such as specialised strapping solutions, automation-friendly tools, and customised packaging systems, enhancing revenue streams and customer stickiness.

l Strategic Partnerships & OEM Collaborations: Potential to collaborate with major OEMs, logistics companies, and steel producers to provide end-to-end, integrated packaging solutions.

Threats l Raw Material Price Volatility: Fluctuations in steel prices can directly impact margins, given the high dependency on raw material costs.

l Intensifying Competition: Both domestic manufacturers and international players entering the Indian market pose pricing and market share pressures.

l Technological Disruption: Advances in alternative packaging materials (such as PET strapping) could challenge the dominance of steel strapping in certain applications.

l Regulatory and Environmental Compliance: Stricter environmental norms, though aligned with Krishcas philosophy, could increase compliance costs and impact margins if requirements escalate.

l Foreign Exchange Risk: With a growing focus on exports, fluct uations in currency exchange rates could affect p rofit ability.

l Economic Cyclicality: As demand is linked to steel, construction, and infrastructure sectors, any slowdown in these industries may adversely impact sales.

Risk Management

Krishca Strapping Solutions Limited has established a comprehensive risk management framework designed to identify, evaluate, and address potential risks that may in fluenc e its operations or finan cial performance. The company actively tracks market trends, regulatory developments, and macroeconomic shifts to remain prepared for emerging challenges.

Robust internal controls, adoption of advanced technologies, and a stringent quality management system help minimise risks associated with manufacturing efficien cy and product consistency. At the same time, Krishca places strong emphasis on monitoring its supply chain, competitive environment, and workforce dynamics to mitigate operational disruptions.

Through this proactive and structured approach, the company seeks to strengthen business continuity, enhance resilience, and ensure sustained growth in an evolving market landscape.

Internal Control Systems and Their Adequacy

Krishca Strapping Solutions Limited has established a strong internal control framework that is tailored to the scale and complexity of its operations. The framework is designed to safeguard company assets, ensure accuracy and reliability in finan cial reporting, and enhance overall operational efficien cy.

The companys internal control systems extend across all key finan cial and operational functions, including procurement, production, sales, and finan cial management. These controls are regularly reviewed and updated to ensure their continued effect iveness and alignment with evolving business needs. Clear segregation of duties further strengthens the system by delineating responsibilities among personnel, thereby creating checks and balances that minimise the risk of errors or fraudulent activities.

To reinforce accountability, internal audits are conducted periodically to assess the adequacy of controls and identify areas for improvement. In addition, annual external audits provide an independent evaluation of finan cial statements and the overall control environment. Compliance with applicable regulations and industry standards remains a priority, with continuous monitoring mechanisms in place to ensure adherence and mitigate risks.

Through this comprehensive approach, Krishca not only enhances transparency and governance but also supports sustainable business growth by building a resilient and reliable control environment.

Human Resources

At Krishca Strapping Solutions Limited, we firm ly believe that our employees are the foundation of our growth and long-term success. We are committed to fostering a positive, inclusive, and performance-driven workplace culture that encourages collaboration, innovation, and continuous learning.

Employee engagement remains a key focus area, with structured feedback mechanisms, training programs, and career development initiatives in place to nurture talent and enhance job satisfaction. Initiatives designed to promote work-life balance further contribute to a harmonious and motivated workforce.

We also place strong emphasis on productivity enhancement by streamlining work processes, adopting industry best practices, and investing in ongoing skill development. These effort s not only improve operational efficien cy but also empower employees to achieve their full potential.

As of March 31, 2025, our workforce comprised 87 dedicated professionals. We remain committed to building a supportive and growth-oriented work environment that strengthens our competitive advantage in the marketplace.

CAUTIONARY STATEMENT

THIS REPORT INCLUDES FORWARD_LOOKING STATEMENTS REGARDING THE COMPANYS OBJECTIVES, EXPECTATIONS, AND FORECASTS, WHICH ARE BASED ON CURRENT ASSESSMENTS AND ASSUMPTIONS. THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. FACTORS INFLUENCING OUTCOMES INCLUDE GLOBAL AND DOMESTIC MARKET CONDITIONS AFFECTING THE PRICES OF FINISHED GOODS AND RAW MATERIALS, CHANGES IN GOVERNMENT REGULATIONS AND TAX LAWS, ECONOMIC FLUCTUATIONS SUCH AS INFLATION, AND POTENTIAL LEGAL AND INDUSTRIAL RELATIONS ISSUES. THE COMPANY IS COMMITTED TO CONTINUALLY ASSESSING THESE FACTORS AND ADAPTING ITS STRATEGIES TO MANAGE RISKS AND SEIZE OPPORTUNITIES EFFECTIVELY.