Krishca Strapping Solutions Ltd Management Discussions

Economic Overview

The global economy progressed through FY26 against a backdrop of moderating inflation and gradually easing monetary conditions across advanced economies, even as geopolitical uncertainty and shifting trade dynamics continued to weigh on the pace of recovery. Growth remained uneven across regions, with emerging markets continuing to outpace advanced economies. India maintained its position as the fastest-growing major economy, reinforcing its significance as a driver of global industrial demand.

Indias real GDP grew 7.7% in FY26, accelerating from 7.1% in the preceding year and surpassing the Second Advance Estimate of 7.6%. Growth in the fourth quarter (January–March 2026) reached 7.8%. Real GDP stood at C 323.12 lakh crore and Nominal GDP at C346.36 lakh crore, per MoSPIs Provisional Estimates.

Manufacturing was a standout contributor, expanding 10.7% in FY26 compared to 9.3% in the previous year. Trade, transport, hotels, communication and financial services also recorded strong double-digit growth. In its August 2026 monetary policy review, the RBI projected real GDP growth of 6.7% for FY27, with risks evenly balanced.

This sustained momentum in domestic consumption, investment and manufacturing activity directly underpins demand for industrial packaging and speciality steel products, the two verticals in which the Company operates.

( Source : Ministry of Statistics and Programme Implementation (MoSPI), Provisional Estimates of Annual GDP for FY26.)

Industry Overview

Steel Industry

Indias crude steel production rose 10.7% year-on-year to approximately 168.4 million tonnes in FY26, consolidating the countrys position as the worlds second-largest steel producer. Domestic steel consumption reached 164 million tonnes, up approximately 7–8%, driven by continued government spending on infrastructure, housing and urbanisation. Finished steel exports surged 35.9% to 6.6 million tonnes during the year while imports declined 31.7%, enabling India to regain its position as a net exporter of steel.

Total installed steel capacity stood at approximately 220 million tonnes in FY26 and is projected to reach 300 million tonnes by 2030 under the National Steel Policy, 2017, supported by continued investment from major producers. A significant policy catalyst is the Production Linked Incentive (PLI) Scheme 1.2 for Speciality Steel, under which the Ministry of Steel has signed Memorandum of Understanding with 55 companies across 85 projects, representing committed investment of C 11,887 crore and incremental capacity addition of approximately 8.29 million tonnes, with incentives payable over five years commencing FY26.

( Source : Ministry of Steel, Government of India (Press Information Bureau).

Speciality Steel and Advanced Materials

Indias speciality steel segment is gaining strategic importance, driven by rising demand from automotive, engineering, energy, infrastructure and advanced industrial applications. The segment offers higher-value opportunities through products with enhanced strength, corrosion resistance, precision and performance characteristics. The growing focus on import substitution and advanced manufacturing is creating opportunities in precision-gauge stainless steel, high-carbon strips, hardened and tempered strips and super alloys, supporting Indias transition towards higher-value steel and advanced material applications.

Steel Strapping

The global steel strapping market was valued at approximately USD 1.26 billion in 2025 and is projected to grow to USD 1.82 billion by 2030, at a compound annual growth rate of 7.5%. Growth continues to be driven by industrial expansion, growing transportation and logistics networks, rising demand for corrosion-resistant and high-tensile strapping grades, and increasing adoption of automation in packaging and material handling.

Domestically, steel strapping demand tracks closely with the trajectory of steel production, infrastructure investment and industrial packaging requirements. Demand is further reinforced by the governments continued push under Gati Shakti and the National Infrastructure Pipeline, rising exports of steel and engineering goods requiring secure and internationally compliant packaging, and the expansion of Indias manufacturing base. The industry is gradually moving toward integrated packaging solutions comprising steel strapping, seals, tools, automation and on-site contract-packaging services. At the same time, the segment remains subject to competition from PET, PP and composite strapping materials, as well as volatility in steel and cold-rolled-steel input prices.

( Source : The Business Research Company, Steel Strapping Global Market Report 2026; Krishca Strapping Solutions Limited, H1 FY26 Investor Presentation).

Business Overview

Founded in December 2017 and headquartered in Chennai, Tamil Nadu, Krishca Strapping Solutions Limited has evolved from a specialised steel strapping manufacturer into an integrated industrial packaging and engineered-materials platform. The Company was Indias _rst to introduce a lead-free, eco-conscious heat treatment process for steel strapping, and continues to operate its Chennai facility with an annual capacity of 30,000 MT of steel straps and 120 million strapping seals. The Company serves over 200 clients including Tata Steel, JSW Steel, SAIL, Vedanta, APL Apollo and Shyam Metalics.

Industrial Packaging and Contract Services

The packaging contract division was the most commercially significant operating development of FY26. The Companys Total Packaging Solutions model, built around the integrated deployment of Manpower, Materials and Maintenance at client sites, continued to scale during the year. By March 31, 2026, the Company had 15 active packaging contracts across India, up from 12 at the start of the year. The overall order book stood at approximately C 300 crore, with execution timelines spanning one to five years.

The commencement of the APL Apollo engagement in April 2025, valued at approximately C 25 crore annually, marked the Companys largest single packaging contract at the time. Relationships with Vedanta/ESL Steel, JSPL, SAIL, Sambhv Steel and Shyam Metalics deepened during the year. The strategic objective is to derive 50% of topline revenue from long-term, service-led packaging offerings over the medium term.

The Company also broadened its product portfolio during the year to include desiccants, tarpaulins, HDPE/LDPE products, airbags and VCI-based corrosion protection, positioning itself as a total packaging solutions provider. Domestic primary packaging revenue for FY26 was C 38 crore, with an additional C 14 crore from exports. The Company has initiated a C 2 crore desiccant manufacturing facility with 200 tonnes per month of installed capacity to support further vertical integration in this category.

Cold Rolling Complex

The Cold Rolling Complex in Chennai represents the Companys most consequential capital investment during FY26. Originally conceived as a backward-integration initiative to secure raw material for the strapping operation, the scope evolved into a speciality steel platform capable of manufacturing precision-gauge stainless steel strips and high-carbon steel strips, including thin gauges down to approximately 0.1 mm.

The planned installed capacity is 60,000 tonnes per annum. As at March 31, 2026, C 41.17 crore had been capitalised as capital work-in-progress and a further C 42.59 crore had been advanced towards the project, representing a total commitment of approximately C 83.76 crore. The project had not reached commercial production by March 31, 2026. Commissioning is now targeted for September 2027, subject to equipment installation and trial production timelines.

Separately, the Company holds a 51% stake in Manda Stainless, a facility in Vapi, Gujarat, with a capacity of 36,000 tonnes per annum focused on utensil-grade stainless steel and high-carbon CR coils. Commercial production at Manda Stainless is targeted for February 2027. An important de-risking feature of this facility is 18,000 MT of captive consumption requirement, representing approximately C 200 crore of internal demand.

Together, the Chennai CRM and Manda Stainless are designed to provide the Company with raw material independence, superior quality control and access to higher-value speciality steel markets where India currently depends on imports.

Vajra Alloys

During the year, the Company incorporated Vajra Alloys Private Limited as a wholly owned subsidiary to manufacture superalloys and specialised alloy materials for aerospace, defence, energy and precision engineering applications. The initiative was at an early stage during FY26, with an initial investment of approximately C 7 crore contemplated. Under the PLI Scheme 1.2, Vajra Alloys has a committed investment obligation of C 55 crore and a committed production capacity of 700 tonnes per annum over the scheme period, with estimated incentives of approximately C 25 crore.

The facility is designed to utilise advanced heavy vacuum induction and melting apparatus. It is led by Experts who brings over 35 years of metallurgical experience. Commercial production is targeted for Oct 2026.

Vajra Alloys will emerge as an important growth driver in a high-barrier, high-margin segment over the coming years.

International Operations

The Companys export performance moderated during the year. H1 FY26 export revenue was approximately C 8.8 crore, compared with over C 20 crore during the full preceding financial year. The moderation was a deliberate response to adverse pricing economics: Chinese and Korean suppliers were pricing aggressively in the Companys principal export markets, and Indian medium-carbon steel input costs impaired competitiveness. Export EBITDA margins were approximately 10–12%, below domestic margins.

The Company maintains subsidiaries in the UAE and Singapore as strategic hubs for the Middle East, Southeast Asian and African markets. The UAE subsidiary is being developed as a manufacturing and warehousing facility, not merely a sales outpost. The Companys products are certified to IS 5872:1990, ASTM D-3953 and BS EN 13246:2001, supporting its positioning as a credible alternative to established global suppliers. The Cold Rolling Complex is expected to restore export competitiveness by reducing open-market raw material dependency.

Financial Performance

FY26 was a year of accelerated scale accompanied by deliberate investment in the next phase of the Companys business model. Revenue expanded substantially while near-term Profitability reflected the cost of capacity creation and diversification.

Metric	FY25	FY26	Change
Revenue from Operations	149.20 crore	233.65 crore	+ 56.6 %
Total Income	151.08 crore	235.22 crore	+ 55.7 %
EBITDA	24.29 crore	30.12 crore	+ 24. 0%
EBITDA Margin	~ 16.3 %	~ 12.9 %	- 339 bps
Profit Before Tax	15.98 crore	16.07 crore	+ 0.5 %
Profit After Tax	11.74 crore	11.61 crore	- 1.2 %
PAT Margin	~ 7.9 %	~ 5.0 %	- 290 bps
Basic EPS (C )	8.65	7.99	Decline

Standalone audited figures. EBITDA and margins derived from Company-reported data.

Revenue and Scale

Revenue from operations grew 56.6% to C 233.65 crore, driven by the scaling of packaging contracts, the commencement of the APL Apollo engagement, deeper penetration with Vedanta/ESL Steel and SAIL, and continued growth in the base strapping and seals business. The first half contributed C 92.55 crore, with the second half accelerating further as packaging contract volumes ramped.

Margin Bridge & Strategic Transition Costs

The 56.6% revenue growth did not translate proportionately to the bottom line. PAT declined marginally by 1.2% to C 11.61 crore, and EBITDA margin contracted approximately 339 basis points from ~16.3% to ~12.9%. Three cost lines explain the compression.

Depreciation and amortisation rose from C 4.76 crore to C 8.35 crore, reflecting the front-loaded capitalisation of new capacity and equipment. Finance costs increased from C 3.70 crore to approximately C 5.88 crore as borrowings expanded to fund the Cold Rolling Complex. Employee benefit expense grew from C 10.85 crore to C 15.23 crore, driven by headcount expansion to support the scaling of on-site packaging operations and the build-out of the speciality steel team.

This profile is characteristic of an investment year in which capital is deployed ahead of revenue conversion. The Cold Rolling Complex, which accounted for the bulk of the capital commitment, had not begun contributing operating revenue by March 31, 2026. As the CRM and packaging contracts reach steady-state utilisation, the cost base is expected to generate improving operating leverage.

Working Capital

The expansion carried a significant working capital requirement. Inventories had increased to approximately C 32.82 crore by September 2025, from C 28.29 crore at March 2025. Short-term borrowings nearly doubled from C 29.54 crore to C 57.25 crore over the same period, while long-term borrowings rose from C 3.54 crore to C 25.59 crore. Packaging contracts, which require the Company to carry materials, workforce and operating infrastructure at client sites ahead of billing, are structurally working-capital intensive. The CRM project adds further capital absorption until commissioning.

Capital Allocation

On February 27, 2026, the Board approved a preferential fund raise of approximately C 63.97 crore, comprising C 40.01 crore through 17.17 lakh fully convertible warrants at C 233 each to the Promoter and Promoter Group, and C 23.96 crore through 12.61 lakh equity shares at C 190 each to public-category investors. The proposed deployment was C 48 crore for working capital augmentation and C 15.97 crore for general corporate purposes. The issuances were approved at the Extraordinary General Meeting held on March 26, 2026.

The significant promoter participation in the fund raise reflects confidence in the Companys strategic direction and upcoming capacity commissioning. The Company also received approximately C 11.49 crore from an earlier warrant issue during the year, utilised for expansion of manufacturing facilities and working capital, with no reported deviation from the stated object.

PLI Scheme Participation

In February 2026, both Krishca Strapping Solutions Limited and Vajra Alloys Private Limited received approvals under the PLI Scheme 1.2 for Speciality Steel and signed MOUs with the Ministry of Steel. Krishca is approved for thin precision-gauge stainless steel (0.18–0.40 mm) with a committed production capacity of 70,000 TPA and a committed investment of C 108 crore. Vajra Alloys is approved under the Super Alloys category with a committed production capacity of 700 TPA and a committed investment of C 55 crore.

Estimated aggregate PLI incentives are approximately C 98 crore over four financial years (C 73 crore for Krishca and C 25 crore for Vajra Alloys), subject to scheme terms. Krishca is one of only 88 companies nationally, and the only company in South India, to have signed this specific MOU.

Key Financial Ratios

Ratio	FY25	FY26	Reason for Variation
Current Ratio	1.23	1.12	The Current Ratio remained broadly stable. The marginal change is attributable to the increase in current assets, primarily inventories and trade receivables, broadly in line with the increase in current liabilities.
Debt-Equity Ratio	0.33	0.62	The increase was mainly due to higher borrowings during the year, including long-term borrowings, to support the Company\u2019s expansion and capital expenditure requirements.
Debt Service Coverage Ratio	5.56	5.03	DSCR decreased from 5.56x to 5.03x mainly due to an increase in finance costs arising from higher borrowings during the year towards expansion and capital expenditure. Despite the increase in debt servicing costs, the Company continues to maintain a comfortable DSCR of 5.03x.
Return on Equity	11.5%	10.25%	The decrease is primarily attributable to the increase in shareholders\u2019 funds during the year, including the increase in reserves and surplus, while Profit remained broadly stable.
Inventory Turnover Ratio	3.1	4.35	The improvement was mainly due to higher business volumes and corresponding increase in consumption/sales, resulting in better utilisation of inventory during the year.
Trade Receivables Turnover	3.9	5.14	The improvement reflects higher revenue from operations relative to the average trade receivables, indicating improved utilisation and collection efficiency.
Trade Payables Turnover	6.6	8.29	The increase was primarily attributable to higher purchases and business activity during the year compared with the corresponding increase in average trade payables.
Net Capital Turnover Ratio	2.6	7.56	The significant increase was mainly due to higher revenue from operations coupled with relatively lower net working capital compared with the previous year.
Net Profit Ratio	7.9%	4.91%	The decrease was primarily due to the relatively stable Profit after tax despite significant growth in revenue from operations, resulting in lower Profit margin as a percentage of revenue.
Return on Capital Employed	14.5%	17.13%	The improvement was mainly due to higher operating earnings during the year and improved utilisation of the capital employed in the business.

Opportunities and Threats

Opportunities

Entry into the speciality steel and super alloy segments via the Cold Rolling Complex and Vajra Alloys, supported by PLI 1.2 approvals, positions the Company in a high-margin, import-substitution category with estimated incentives of approximately C 98 crore over four years.

The approximately C 300 crore order book, with execution timelines spanning one to five years, provides meaningful multi-year revenue visibility and reduces dependence on transactional product sales.

First-mover sustainability positioning through Indias first lead-free, energy-efficient heat treatment process for steel strapping remains a differentiator for clients with ESG mandates and for premium export contracts.

Product diversification into tarpaulins, airbags, HDPE/LDPE products, desiccants and VCI-based corrosion protection broadens wallet share with existing industrial clients and supports the total packaging solutions proposition.

The Cold Rolling Complex is expected to restore export competitiveness by reducing open-market raw material dependency, enabling more viable pricing against Chinese and Korean competition in the Middle East, Southeast Asia and Africa.

Threats

Raw material price volatility, given the Companys dependency on steel and alloy input costs, directly affects margins. The EBITDA margin compression from ~16.3% to ~12.9% in FY26, while partly attributable to investment-phase costs, also reflects the sensitivity of the product mix to input pricing.

Intensifying competition from domestic manufacturers and international players, particularly Chinese and Korean exporters, resulted in deliberate moderation of export volumes during FY26 and remains a structural challenge in certain markets.

Competition from alternative packaging materials such as PET, PP and composite strapping continues in applications where steel strappings tensile strength premium is less critical.

Execution risk on the Cold Rolling Complex and Vajra Alloys is the most consequential operational risk. The CRM missed its original FY26 commissioning target, and the future revenue trajectory depends on successful commissioning, customer qualification, utilisation ramp-up and product acceptance in technically demanding steel grades.

Economic cyclicality linked to the steel, construction and infrastructure sectors may affect demand. The packaging contract model, with its multi-year execution timelines, provides partial insulation but does not eliminate exposure to cyclical downturns.

Risk Management

The Company has established a risk management framework designed to identify, evaluate and address potential risks that may influence its operations or financial performance. The key risks identified and the corresponding mitigation measures are set out below.

Risk	Description	Mitigation Measures
Raw Material Price	Fluctuations in steel and alloy input prices directly affect margins. FY26 EBITDA margin compression reflected,	Long-term supply arrangements with primary steel mills. The Cold Rolling Complex is designed to provide captive raw material supply and reduce open-market dependency. Pricing
Volatility	in part, the sensitivity of the current product mix to input costs.	and procurement decisions are informed by continuous monitoring of input price trends.
Execution and	The CRM and Vajra Alloys represent significant capital commitments. The CRM had not reached commercial production by March 31, 2026, and the	Phased commissioning approach with conservative utilisation assumptions. Project execution tracked against defined milestones. Manda Stainless (Gujarat) features 18,000 MT of captive consumption, de-risking initial utilisation. Funding
Commissioning Risk	revenue trajectory depends on timely commissioning, customer qualification and utilisation ramp-up.	structured through a combination of equity, internal accruals and limited subsidiary-level debt.
Working Capital Intensity	Packaging contracts require the Company to carry materials, manpower and infrastructure at client sites ahead of billing. The CRM adds further capital absorption until commissioning. Short- term borrowings increased substantially in FY26.	The preferential fund raise of approximately C 64 crore includes C48 crore allocated to working capital augmentation. The CRM is expected to reduce raw material inventory holding for captive strapping. Structured internal targets to reduce receivable days over the medium term.
Competition and Export Pricing	Chinese and Korean suppliers are pricing aggressively in export markets, resulting in deliberate moderation of export volumes during FY26.	Differentiation through lead-free production, ESG compliance and international certifications (ASTM, BS EN, IS). Backward integration through the CRM is expected to improve cost competitiveness. Focus on long-term, sticky packaging contracts where switching costs are higher.
Client Concentration	A meaningful share of revenue is contributed by a small set of large industrial clients.	Active pipeline development across new sectors and geographies. Multi-year packaging contracts with marquee clients provide revenue visibility. Broadening of the client base through export markets and the primary packaging portfolio. From the new CR Coil business, the concentration will be very less.
Technological Disruption	Advances in alternative packaging materials such as PET strapping could challenge steel strapping in certain applications. Demand is linked to the steel, construction and infrastructure sectors; downturns in these industries may	Broadening the product portfolio beyond steel strapping into tarpaulins, airbags, HDPE products, desiccants and VCI-based corrosion protection. Continued investment in automation and packaging technology. Diversified client base across steel, construction, automotive and logistics. Recurring multi-year packaging contracts (one to five year execution) provide partial insulation. Expansion
Economic Cyclicality	adversely affect volumes.	into specialty steel and super alloys reduces single-sector dependence.
Dilution Risk	The February 2026 preferential proposal could materially expand the equity base upon full warrant conversion.	Promoter participation of C 40 crore in the fund raise signals alignment between promoter and shareholder interests. Capital is deployed toward revenue-generating assets with defined commissioning timelines.

Internal Control Systems and Their Adequacy

The Company has established an internal control framework tailored to the scale and complexity of its operations, designed to safeguard assets, ensure accuracy and reliability in financial reporting, and enhance operational efficiency. These controls extend across procurement, production, sales and financial management, and are regularly reviewed and updated in line with evolving business needs. Clear segregation of duties strengthens the system by delineating responsibilities among personnel, creating checks and balances that reduce the risk of errors or irregularities.

Internal audits are conducted periodically to assess the adequacy of controls and identify areas for improvement, complemented by annual external audits that provide an independent evaluation of financial statements and the overall control environment. During the year, the Board approved the appointment of M/s. L V A & Associates, Chartered Accountants, as Statutory Auditors, following the resignation of the Companys previous auditors. The appointment was ratified by shareholders at the Extraordinary General Meeting held on March 26, 2026.

Human Resources

The Company views its employees as the foundation of its growth and long-term success. The workforce has grown alongside expanding operations, standing at over 120 employees across packaging and speciality steel operations as at March 31, 2026.

During the year, the Board approved key leadership appointments to support the Companys evolving business model. Mr Terli Venkata Shivaji was appointed Chief Executive Officer and Mr S Krishnamachari was appointed Chief Financial Officer, effective 1 March 2026, as the Company builds dedicated leadership for its packaging and speciality steel verticals.

Shareholding Structure

As at March 31, 2026, the Company had 2,757 shareholders. Promoter shares amounting to approximately 64.45 lakh shares (43.28% of equity) were held under lock-in. No promoter shares were pledged or otherwise encumbered. This shareholding structure does not incorporate the eventual dilution from the preferential warrants and equity shares proposed in February 2026, which will be reflected in the FY27 capital structure upon allotment and conversion.

Shareholder Category	Shares	Holding (%)
Promoter and Promoter Group	76,08,250	51.10%
Public	72,81,750	48.90%
Total	1,48,90,000	100.00%

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, execution risk on capacity expansion projects, commissioning timelines for the Cold Rolling Complex and Vajra Alloys, and potential legal and industrial relations issues. The Company is committed to continually assessing these factors and adapting its strategies to manage risks and pursue opportunities.