Krishca Ltd : A SME offering steel strapping Solution

CMP : 110
FY23 might close > 70 crores
EBITDA margin : ~17%
PAT : 9 crores approx (FY23 yet to be announced)
PAT margin 12%
PE : 14

Amount in crores FY20 FY21 FY22 FY23 (approximate annualised)
Revenues 0.96 9.41 18.61 70
PAT -2.24. -0.67 1.51 9

Incorporated in 2017, company is manufacturer of high tensile steel straps, strapping seals and strapping tools. It has 100+ customers, 50+ EEs. It boasts clients such as Jindal, JSW, POSCO, SAIL, BAOSTEEL, AJ Steel, THL pipe, Hyundai steel. St. Gobain, Gold plus.

Its capacity for steel straps is 18000 MTPA and strapping Seals is 80 MNPA.

About the promoter :

Balamanikandan has a degree in engineering in electronics and communication from Anna university and has obtained master of scientific degree in info security from university of London, UK.
He performed extensive research in steel strapping for nearly 2017-2018 and understood the industry has been concentrated by a few names.

Competition :

Player Per month capacity (MT) Market share
Signode 6000 49%
Grip Strapping. 4000 27.50%
Tata Steel BSL 1000 5%
Walzen Strips. 1500 11%
Krishca 1500 7.50%

Marketsize in India is ~10000 TPM.

Competitive Advantage :

Steel strap is critical item needs stringent heat treatment. Heat treatment process is intense and there is no machine supplier in india, all machines are imported from Korea.

The straps needs to be High precision 100% perfect, since any faulty can cause road accidents. Even a Small crack can make entire FG useless.

Krischa is the lowest cost producer. Competition using Led based oven. They are doing electrical based oven, pollution free process.

Also These are small % of end product, making the customer not so sensitive to price change. It is a small market and hence no large player would want to have it inhouse.

Purpose of issue :

Company raise ~18 crores to fund new capex (12 crores) and to repay its debt (4 crores). The company intends to double capacity to 3000 MT New capacity will be ready by Oct/Nov, 2023.
Per tonne sells for approx 1lac. So can achieve 180 crores with current capacities.
With 3000 MT can achieve 350 crores turnover.

Growth drivers :

India is one of the fastest growing steel industry. Current production is around 120 Million MTPA, and by 2030, it is expected to reach 300 Million TPA.

Company plans to enter packing contracts business, it will help in boosting turnover at similar margins, doesn’t need any capex, it is a service business.

Their facilities are proximity to Chennai port, opening up export opportunities in Middle East. There are no players there, also can cater to US market from there. US has ADD on steel straps from India.

Anti Thesis :

Their RM is Steel coils, any fluctuations can in the interim dent margins.

Company doesn’t have a long track record, was established in 2017.

Disc : invested


Interview of Bala Manikandan

Company has started conference calls as well

Disc: Not invested



Incorporated in 2017, Krishca Strapping Solutions Limited is a manufacturer and wholesaler of Strapping Tools and Seal.

Krishca partners with top manufacturers to provide a complete range of steel strapping tools for various packaging applications.

Quality is always assured at Krishca because they only purchase from ISO certified primary steel mills.

The company raised 17.93cr through a fresh issue (not ofs, which means promoters believes in the business).

The issue was utilized for:
A) Capital Expenditure for setting up of New Strapping Line

B) Repayment of Borrowings

C) General corporate expenses and issue expenses

Already reduced the borrowings, and also planning to commission the capex by December 23.

The company website is top notch and very smooth.

The company is proud to be India’s first “Lead-Free” and eco-friendly production line for the heat treatment of steel strapping.

The industry they are catering to is steel mills, mainly JSW Steel, Tata Steel etc, all those are bigger steel mills.

The steel is produced at a very high temperature. Their steel straps are used to pack when the steel coil comes out of the oven, which is almost 200-degree, 300-degrees. There is no other material/product which can withstand this temperature during packing.

Offers guaranteed high quality straps with optimal physical and geometrical properties, as every millimetre of the strap undergoes a rigorous quality control test.

Offers three types of straps: Prime, Super Prime and Ultra prime.

Each millimetre of the strap undergoes a state-of-the-art heat treatment process using PLC-controlled automation that delivers superior elongation, shock resistance, and break strength.

Their automated quenching process ensures uniform grain structure across the entire length of the strap, while the heat treatment produces a distinctive blue-shimmering oxide layer that acts as a natural barrier against corrosion.

Krishca’s technology provides the company with a competitive advantage over its rivals, as it has a lower cost of production than the industry standard by reducing the rate of scrap generation, making the production process more energy-efficient, and reducing environmental impact.

All their Steel Strappings are treated with a Wax coating finish. This lubrication allows the strapping to flow smoothly in automatic machines, tools and around corners of the products. They offer three types of surface finishing.

  1. Blue Tempered

  2. Painted

  3. Zinc

Apart from providing high quality strapping solutions at competitive prices, they also provide unique and customized colour printing on the steel seals to facilitate customer’s branding.

Their commitment to providing the highest quality tools to their customers is reflected in their prompt and effective solutions for their packaging needs. Their service team consists of factory-trained engineers who work closely with each client to identify the most effective strapping tool for their specific application.

State of the art equipment
A) PLC Controlled automatic production line

B) Automated heat treatment process-Uniform grain structure

C) Pollution-free production process - Lead-free

D) Super Jumbo coils upto 500 Kg

High-Quality Compliance

The steel strap quality requirements of the company are in compliance with American, European, and Indian standards.
IS 5872:1990 - Cold rolled steel straps (box strappings) specification;

ASTM D-3953 - Standard Specification for Strapping, Flat Steel and Seals; and

BS EN 13246:2001 - Packaging.

Its products are sold under the “Krishca” brand., which has garnered 7.5% market share amidst peers like Signode India, Grip Strapping, Tata Steel BSL, and Walzen Strips.

Since they already have steel strapping, and also are very comfortable in supplying strapping tools to do a packing contract.

Let’s say a TMT bar is being produced in a steel mill. They will need a strapping tool and also steel strapping to do the packing and the manpower to do the packing.

So out of three elements, they have the steel strapping and the strapping tools.

And now will start with packaging contracts.

In the long run, three years to four years, they are aiming to get at least 30% of revenues from packing contracts.

Since the COVID lockdown was imposed. So in the first financial year, they were not able to cater the large volume customers like JSW and Tata Steel because they never completed the vendor registration in the first year. So were mainly supplying to the local coming out players.

So the customers were very limited, hence higher revenue concentration.

But now in the last one to two years, have added many new customers like JSW Steel.

Out of the total contracts and orders, about 40% are long-term contracts from various mills, which have a contract of five years.

And POSCO, which is a Korean company, they are supplying to the entire six service centers in India. There they have a six-month contract.

And there are packing contractors with whom they have a one or two-year contract.

So the remaining 60% of sales will go to multiple people on a spot basis.

Company has employed 50 employees as of February 15, 2023 on payroll. The above includes employees in the top and middle management, and also employees and labour who are part of the manufacturing unit, human resource, administrative staff and office staff.

Apart from this, they also engage contract laborer to facilitate manufacturing operations.

EPFO payments are being done for 40+ employees, proving their employee strength of 50. The amount being paid is also being increased regularly.

A very sophisticated setup with strong focus on quality for a company this size.

The MD has vacant land, which is used as security against their short term borrowings, we don’t know if this is personal land or for a company.



One interesting thing to note is these companies were incorporated in 2023 feb, except markwell

Found some info on markwell- it is into high resolution inkjet printers, continuous sealing and vacuum packaging. They are working in collaboration with a German based company

About Us | Markwel | Large Character Coding and Marking | High Resolution Inkjet Printer | Laser systems

I couldn’t find the website of any other company from the above list, except markwell.

The MD is 30 years old and was previously in the cyber security business, a bit risky as the business he is doing now is all very different.

Although He has performed a detailed market research on steel strapping for almost a year between 2017-18 for setting up this Company, and also the overall numbers speak volumes.

He has over 3 years of work experience as a cyber-security consultant in the UK where he has handled several cyber security compliance projects for companies such as Visa and Samsung.

The Chief of Operations- Rajarathinam Govindaswamy has previously worked for TUBE INVESTMENTS INDIA for 33+ years.

The CFO is holding a marketing degree? And is the wife of the MD, and the wife’s sister is also a director, with close to 13% equity ownership.

The CFO of Phantom Digital is also an independent director here.

The management is very confident on the growth and demand for the company and its products, hence doubling the current capacity which is not even fully utilised right now.

The management is very thoughtful and smart and does not take irrational decisions, and is also very ethical and aware –

Seeing that Krishca cannot supply to the US due to the anti dumping duty, it decided to set up a base in the Middle east and use it as a trading arm. They took this decision as they already supply to the Middle east, have done market research there and have some lay of the land.

If they wanted they could just route the products from India to the US through the Middle East, but they know that it’s not ethically correct and hence did not act on it.

Entry barrier

The manufacturing process consists of a total of 15 steps, which is very complex. This is very difficult to do and thus acts as an entry barrier for new entrants.

The major entry barrier in this industry is getting your product approved at all levels.

It took them almost three years (covid elongated the process a bit) to get their products approved because steel strapping is a very safety critical item.

The items packed with steel strapping are weighing between 10 tons to 25 tons.

Even if there is any small crack in the strap, it will break, it will lead to a very severe accident or fatality.

So steel mills give utmost importance to steel strapping purchase.

If you look at the public sector, like SAIL and Vizag steel, all those steel companies, that is even more difficult because they will ask to provide a PO from private mills for at least INR10 crores, INR15 crores worth of purchase orders in the last two years.

So even to participate in the PSU, one needs at least three and four years of experience and market presence.


Quality- They have India’s first ‘Lead Free’ environment friendly production line for the heat treatment of steel strapping.

Company has a lower cost of production than the industry standard by reducing the rate of scrap generation, making the production process more energy efficient.

They are using an induction based furnace and competitors are using a muffle based furnace. So, the energy cost is almost 50% of competitors.

Their customers save 3000 – 4000 Rs/Ton in freight charges when purchasing from Krishca instead of other players, due to its plant location.

When they compete against a US company (Signode) and a German company (Grip), their overheads are much lower, due to cheaper availability of labour and materials in India.

State of the art production line: own India’s most advanced, Integrated and fully automated production line. Their production cost is less than 50% of the competitors.

Their production is the only fully automated production line.

From the start to end, it is a single production line which is fully automated. If you look at the competitor, all other people are doing a two or three step process. So, this provides them with the lowest production cost in the industry when compared with competitors.

Remarkable surface finish: They use special grade water based paints and their custom designed modern oven dries the paint inside which results in a blister free, uniform paint finish across the entire length of the strap.

Custom Branding: provides Industry leading packaging customization in strapping Colours and logo printing on seals.

During covid Krishca focused on R&D and came up with a line which can process multiple grades of steel (raw material), and also their induction oven can tune the temperature very easily between 300-degree to 700-degrees. Therefore they can use various alternate grades of steel which are cheaper compared to the traditional grades used by competitors. Hence even in the raw materials they are saving about 5% to 6% compared to the competitors.

Having a lower employee cost as the line is automated, so require fewer employees when compared to peers.

Due to all these reasons their peers have a single digit margin, whereas Krishca has close to 20% ebitda margin.


The management gave a growth guidance of 35-45% for FY24 due to increased sales from current operations plus revenues from the new strapping line, which will come online by December 2023.

Trade receivables as percentage of sales has been coming down Y-o-Y.

As per the Nation Steel Policy 2017, total Indian steel output is projected to reach 300 Mn Tons by 2030. To Cater the Industry’s rising output as well as to serve the overseas market, they plan to double their capacity.

Very important points above

Only steel strapping manufacturer in Chennai

Zero litigations, neither against/by the company, nor against/by the directors.

Company is able to pass on raw material costs on a monthly basis, except for longer term contracts.

The margins are not impacted by the volatility in the steel prices as they have a quarterly contract with some suppliers, and have a 6-month contract with some suppliers. And also, have a monthly spot price supplier.

So, they have different combinations of suppliers. So, even if there is a sudden price increase, let’s say in July, August, they will mostly buy from the quarterly supplier or 6-month supplier. So, they will keep the price the same for 3 months, 6 months period. So, like that, by having multiple suppliers with different pricing policies, they are able to protect themselves.

Signode the industry leader cannot supply to the Middle East through the Indian plant, as they already have an internal agreement to only supply from Turkey, even the other international players are somewhat restricted due to their international presence. Hence Krishca will benefit here as Turkey cannot compete with Indian pricing. Therefore Krishca will be more attractive for the customers there.

For the first time they are participating in a PSU tender in August. Have recently got all the credentials to participate in the tender itself. In the PSU sector the margins are higher

In addition to expanding the production capacity, also venturing into the

packing contract segment.

  • appointing a head of packing contract division from August 1st.
  • The reason for entering the packing contract is that it provides a very stable order. Each packing contract is a minimum one year, even up to five years. So once they get a packing contract, steel strapping sales are assured for a minimum one year at an agreed price. So this gives them assured revenues.
  • This will help them gain more customers, bigger contracts, and more predictable revenues.
  • The margins in this business is upto 15%, but can help Krishca garner a significantly higher topline.

Steel strapping imports.

  • There is a BIS certification required for any steel strapping manufacturer to supply to India. If you look at the overseas suppliers, there is only one company in the world that has BIS out of India. Only that company is able to supply to India, which is a Korean company.
  • None of the Chinese mills have BIS. Let’s say, somebody goes ahead and gets a BIS. They still have to face import duty, which is 7.5%. And there is an import duty for steel strapping grade, almost 10%. So, roughly 18% additional tax somebody has to pay in order to supply to India.
  • The Chinese are cheaper by only 20%, so even if they enter the markets they will be at par with domestic suppliers.

Setting up a new office in Dubai, already in the process of incorporating a subsidiary.

  • In the US there is an anti dumping duty of 50% for steel strapping. So another reason for setting up a base in MIDDLE EAST is to get the access to export their products anywhere in the world without any anti dumping duty.
  • By the end of July, they will have an operational warehouse and office in Dubai and already have a few people to join from August.
  • So, from their new office in Dubai, they are expecting to increase revenues not only by selling steel strapping, but also trying to trade other items to provide a total packaging solution to customers.
  • In the Middle East, there is not even a single steel strapping manufacturer in the entire Gulf Middle East region. So that’s where they wanted to explore initially. And already most of their export sales are going to the Middle East only.
  • And the major goal of setting up an office in Dubai is that after one and half - two years, they are going to come up with a production line in the Middle East.

Management is confident of a minimum increase in revenue of 40% year on year for the next five years.

Operating leverage-

  • The company achieved an overall capacity utilisation of 55% approx. for FY 2022- 23.
  • Currently it is operating at 60%, expected to go to 75% (can do 150cr from current capacity at optimum utilisation).
  • As and when their volumes increase, the fixed costs are going to remain the same and hence the margins will improve.

Huge potential to increase exports, the management wants to take exports to 30% from approximately 7% now.


Does not own the registered office of the company, it is on lease

The CFO of Krishca has a marketing degree, she is the wife of the MD, a bit shady.

The steel industry is highly cyclical and volatility in steel prices may have an adverse effect on the Company’s results of operations and financial condition. As and when the steel price drops the topline also takes a hit, although there is no or only a miniscule impact on the margins.

Basically for the topline to grow the steel prices rising is a god thing

Have issued Equity Shares (through rights and bonus issue) during 2019, 22, 23 at a price below the Offer Price.

Given that their business revolves around steel strapping, the growth of the steel industry and its demand plays a major role.

Company is substantially dependent on few customers/suppliers for their operations. As on February 15, 2023, the top 10 customers account for 68.73% of their sales. Similarly, their procurement is 92.48% from top 10 suppliers and more than 68% from top 5 suppliers (mar 23).

Their services are skilled and creative manpower intensive.

They spend significant time and resources in training the manpower they hire. The success is substantially dependent on their ability to recruit, train and retain skilled manpower.

High attrition and competition for manpower may limit their ability to attract and retain the skilled manpower necessary for future growth requirements.

Since they will just be starting with the packaging contracts this year, the first 3-4 contracts will be hard and they will face some issues which may impact margins (my opinion).

Have given the guidance of 35-45% topline growth based on the commercialization of the new strapping line, which is expected in December. If somehow the line gets delayed, it will impact/delay growth.

‘’the Board of Directors of the Company have been authorized to borrow money from time to time, any sum or sums of money as the Board may deem fit, notwithstanding that the money to be borrowed together with the money already borrowed by our Company may exceed in the aggregate, its paid up capital and free reserves and security premium (apart from temporary loans obtained / to be obtained from bankers in the ordinary course of business), provided that the outstanding principal amount of such borrowing at any point of time shall not exceed in the aggregate of ₹ 50 crores (Rupees Fifty Crores Only).’’



Manufacturing facility in Chennai with capacity of 18,000 MT of steel straps and 80 million Seals per annum.

Company intends to double its production capacity, and the proposed facility is capable of producing Ultra High Tensile Steel strapping which will enable the company to enter into new segments like wagon lashing and jute packing.

Increased capacity of seals by 30%.

The company achieved an overall capacity utilisation of 55% approx. for FY 2022- 23.

Geographical Revenue Bifurcation


Financial highlights of FY23,

  • total revenue was INR72.4 crores in the last financial year which is a 386% growth when compared to FY22
  • current EBITDA is INR13.87 crores which is almost 330% growth compared with the previous year
  • current EBITDA margin is about 19.15% which is almost 2% increase when compared against the previous financial year
  • Net profit for FY23 is INR9.34 crores which is a significant growth of 518%. So, almost five times our net profit has increased when compared against FY22
  • Net profit margin is about 12.9% compared to 8% in the previous year.
  • current earnings per share reached INR10.68 paisa compared to INR2.22 paisa in the previous financial year.

The sales have been growing multifold since the last three years

Cash flow from operations have suddenly rocketed in FY23, majorly due to increase in trade payables and wrongful writing of short term borrowings in cash flow from operating activities instead of financing activities.

Trade payables have shot up close to 8 times, although all these are outstanding for less than 1yr, so we need not worry about them defaulting

Although the receivable days have increased, the inventory levels have come down by more than 50%, hence bringing down the working capital days.

The reserves and surplus was previously negative, now in FY23 have turned positive significantly.

Long term borrowings have come down.

The short term borrowings have shot up.

The plant and machinery has come down a lot from previous years, due to very high depreciation.

CWIP has increased a lot, indicating that they are deploying the IPO funds for the capex.

The inventories have increased multifold, due to increase in finished goods.

Trade receivables have more than doubled, may be due to significant sales growth of close to 300%. Out of this majority is outstanding less than 6 months and rest is 1 year


The Global Steel Strapping Market Size was estimated at USD 1218.74 million in 2022 and is projected to reach USD 1533.15 million by 2028, exhibiting a CAGR of 3.33% during the forecast period.

Indian steel industry is the second largest in the world with the output of 113 Mn tons per annum in FY 2021 - 22. As per the Nation Steel Policy 2017, total Indian steel output is projected to reach 300 Mn Tons by 2030.

The per capita consumption of steel has increased from 57.6 kgs to 74.1 kgs during the last five years.

Easy availability of low-cost manpower and presence of abundant iron ore reserves makes India competitive in the global set up.

Based on the market research, the current market size of steel strap consumption in India is 9000 – 11000 Ton per month.

As the industries which use steel strap are projected to see a rapid growth in the next 15 years, the steel strap consumption is also expected to see 5-10% growth each year.

What would increase consumption of steel

In the next three years from June 2021, JSW Steel is planning to invest Rs. 47,457 crore (US$ 6.36 billion) to increase Vijayanagar’s steel plant capacity by 5 MTPA and establish a mining infrastructure in Odisha.

In August 2021, Tata Steel announced to invest Rs. 3,000 crore (US$ 404.46 million) in Jharkhand to expand capacities over the next three years.

In October 2021, ArcelorMittal and Nippon Steel Corp.'s joint venture steel firm in India, announced a plan to expand its operations in the country by investing ~Rs. 1 trillion (US$ 13.34 billion) over 10 years.

In May 2022, Tata Steel announced a CAPEX of Rs. 12,000 crores (US$ 1.50 billion).

The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as it intends to create a globally competitive steel industry in India. NSP 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.

The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.

In July 2021, the Union Cabinet approved the production-linked incentive (PLI) scheme for specialty steel. The scheme is expected to attract investment worth ~Rs.

400 billion (US$ 5.37 billion) and expand specialty steel capacity by 25 million tonnes (MT), to 42 MT in FY27, from 18 MT in FY21.

In addition, enhanced outlays for key sectors such as defence services, railways, roads, transport and highways would provide impetus to steel consumption.

till then do share your observations and learnings


the above may be too long, but if you read through it, i am sure you will know everything one needs to know about KRISHCA.


Kudos for such detailed thread!!! Very well written…

This looks like a structural story as a proxy for growing Indian steel industry and available at PEG of 0.5x

another interesting thing is currently the metal prices are rising, as we have read from my above message, as and when metal prices increases, the topline will also increase


Wow very well written. adding a good illustrative video to understand the strapping process

Second query is that steel strapping is also used in other industries as well. We used to pack the carton boxes using steel straps before loading them on to the truck.

Disc: Not invested, studying.


I recently attended their concall and following are my notes based on my understanding

Krishca Strapping Solutions Ltd

What they do – They are manufacturing Steel straps, Strapping seals and strapping tool and the same are being used in steel mills to pack / tie /strap the minimum 500-1000kg steel coils, steel rods etc.

Industry Structure

Total installed capacity in India – 14000 ton / month and consumption is 9000 ton/month

Concentrated profit pools – only 4 major players in India, They are ITW Signode India Ltd (US MNC), Grip strapping (German MNC), Kolkata based Indian co & Krishca and their market share in manufacturing capacity are 49%, 28%, 10% and 7-8% respectively.

Others can’t enter this segment easily since “product approval cycle by customers are quite long (it will take 1-2 years).

JSW steel or Tata steel or SAIL can easily manufacture this product but they don’t do since the market size is small for the size of JSW or Tata steel. But they turned out to be buyers of steel strapping from these above mentioned players

ITW Signode enjoyed market leading position for long term & their employees are considered themselves as a god’s gift to mankind and enjoyed huge perks & they established themselves as a very long term sole supplier of steel strapping to steel industry

Steel industry capacity in India are 120 million ton & Govt target is 300 million ton in 2030 (am skeptical), hence end user industry growth is around 10%,

Co should focus on gaining market share

Whether any replacement for steel strap in future ? – PET Straps / plastic straps are used in low end application (less tonnage) and PET strap replaced steel strap in textile industry but As of now, steel strap is not replaceable in steel industry due to high tonnage.


Mr.Bala Manikandan is a promoter but don’t have any experience in this filed and he was in IT sector. But he formed this co in 2017 & scaled up revenue to 70 Cr in 5 years.

His wife is co CFO (red flag). She is MBA marketing

In concall, he mentioned that he don’t have other business interest

Manufacturing capacity

Now, co has 18000 ton capacity.
Through IPO proceeds, co spends 12 Cr to establish another production line with 18000 ton capacity (doubling)

Now co sets up office in Dubai and later, it will explore options to establish production line in Dubai to export to USA (Export to USA from India will attract anti dumping duty – Hence, co avoids export from India to USA)

Competitive advantages:

Co claims that they installed induction furnace (electric I guess) for manufacturing steel strap. Due to that, their production cost / energy cost is 50% lower than competitor.

Production line is fully automated compared to 3 step process followed by competitor, Now co not recruits new employees for doubling its capacity.

Selling price of co is 5-6% lower than competitor.

Co’s EBITDA margins are above 14% while competitor margins are single digit

Procurement people from customer side are willing to accommodate new steel strap supplier since they got bored with same Signode & grip strapping since they are there for very long period,

Basically, co is low cost producer and sells at lower price than competitor,

Co get into long term contract with customer i.e 5 year contract with JSW steel, 6 months contract with POSCO,

Prince fluctuation is pass through with 1-3 month lag


Current sales is 70 Cr with 20% EBITDA margin & 10-12% PAT margin

Co guides for 40% growth in revenue for FY24 and aspire to grow at same 40% for next 5 years, (bit skeptical since to do this, their capacity should go 4X of today).

Debt is being paid off via IPO proceeds but they will keep working capital debt,


Bit higher for microcap,

20PE, 30X Price / cash flow, 2.5X Price to sales,

Investment thesis,

Concentrated profit pool, Indian manufacturer,

Tailwinds for entire industry to grow at 10%

Low cost producer

Selling at discount against competitor,

Scaled up turnover from 0 to 70 Cr in 4 years with decent profitabllity

Long term Debt free, cash flow+ve (though it is due to higher trade payable & i observe that their cash flow statement is not accurate one (borrowings are added in CFO) & it is serious red flag for me since cash flow statement can not be manipulated without an intention),

Capex is lined up to double capacity

High growth guidance of 40%pa

Aspiration to grow fast & export to USA


Inexperienced promoter,

Competitors are MNC and have deep pockets and many of the procurement team in customer place are seems to be bribed by competetor (i guess based on previous work experience), hence it is difficult to gain market share

End user industry is deep cyclical

Since raw material & finished goods both are steel, there would be inventory losses when price corrects,

Promoter should not do diversification in unrelated industry – Capital allocation is key risk

Due to 40% growth aspiration, there would be equity dilution or debt funded,

What should I do now,

Wait since valuation is not cheap

Track execution and attend concalls / AGM

Track movement of co from SME platform to main board and it will reduce lot size,


I don’t have an idea about this, but even if it is being used, it can be replaced by other materials I guess, depending on the volatility in steel prices.

Or do you think it cannot be replaced even there?

So you are somewhat right here, but additional to small market size these companies will not enter strapping is because it’s also too complex there a 100’s of combinations and styles for different products and sku’s.

The PET strap cannot hold the high temperature levels of close to 500-700 degrees of hot steel, hence there can be no replacement for steel strap in this industry

Could you tell the source for this. Thanks

They didn’t get bored, the point is there were only a few vendors and hence there can be vendor side dominance in the future, which may impact the customers. Hence they are supportive for new players wanting to come in the industry

So we need to see it like this.

  1. doubling capacity in December 23
  2. already increased the capacity of seals by 30%.
  3. the revenues of packaging will kick in, which are very high and long term, due to contractual nature.
  4. setting up office in Dubai, which will first start with trading goods and then come in with a manufacturing capacity itself. Through Dubai will get access to US and other geographies.

I don’t know what valuations are cheap if not this, the company is growing at this pace and still there is valuation comfort.
Would love to know how do you look at companies for valuations.

Could you explain this point further?

Till now the plan is to do it through internal accruals.

Also maybe you have not read my note above, because most of your pointers are repeating.
But got few interesting insights, thanks


Steel strap and the buckle are the most durable compared to the PET straps. Also PET straps are prone to rupture. I have seen steel straps being used in Lead acid battery packaging, but probably need to dig deeper on what percentage is it.


very interesting, do share you learnings
thank you



Signode is not only into steel strapping, but other products too.
It provides a lot of automation services, which helps customers get better efficiencies.
Signode has brought in new battery powered strapping tools, which are more handy and efiicient.
Another reason for Signode to have the leading market share in my opinion is that it provides warehousing, transit and the complete end to end services to its customers. Customers choose Signode in order to simplify their operations.

The ratings strengths of Signode however is partially offset by revenue concentration risk in the metal segment and absence of firm supply arrangements for raw materials thereby exposing the company to price escalation risk.

Operating cycle of Signode is a lot better than Krishca, close to 30 days.

Crown’s/Signode’s transit packaging products are sold around the world under a broad array of well-known brand names such as Signode, Strapex, Orgapack, Shippers Airbags, Angleboard.

The clientele comprises some of the renowned names in the industry viz., JSW Steel Ltd, Steel Authority of India Ltd, Tata Steel Ltd, Voltas India Ltd etc. Majority of the clients have been associated with the company for decades.

As of FY20 there were no long-term contracts for procurement of raw material and were procured as and when required.

The company generally negates the increase in cost-price difference scenario by passing on the input cost increase to customers where it has strong bargaining power.

Grip strapping is only into steel strapping, their website is not good.

Its manufacturing facility is in Hyderabad, Telangana.

GSTPL inherent business strengths are gained through the long track record and technical expertise of the promoters - Mr. A. Narasimhan, Mr. Hemant Lajpal and Mr. M. Mani, who has over 2 decades of experience in the packing machinery industry.

Its clientele includes reputed entities like Tata Steel Limited, Steel Authority of India Limited, Saint Gobain India Pvt Ltd, Jindal United Steel Limited, Mahalaxmi Industries Services, MPIL Steel Structure Limited, Bhushan Power & Steel Limited, amongst others.

Working capital intensive

The operating margins have been declining Y-o-Y from 7.59 per cent in FY2018 to 5.50 per cent in FY2020.

Walzen also has a very good website (the best), also specializes only in steel strapping and services.

Walzen does something very interesting, it also provides training and expert guidance to the manpower of the customer regarding steel strapping, and a few other services which none of the other players provide.

Does not have an automated production line.

Has a team of 600.

WSPL is a part of Kolkata based “Lyka” Group.

Key clients include Tata Steels, Steel Authority of India Limited (SAIL), Bhushan Power & Steel in the steel industry and National Aluminium Company Limited. (NALCO) in the Aluminium industry and suppliers with Tata Steels Limited.

exports to countries like Bangladesh, Brazil etc.

operating profit margin of 4.27 % in FY18.


Rahil, any idea about margins of Signode? It seems that other two competitors are having single digit margins while Krishca has ~20% margins.

What is leading to such higher margins for Krishca? is it just automated/new machines which has increased their efficiency a lot versus competitors?

I couldn’t find the margins for signode.

The main reasons are for better margins of krishca are-
Plant location
Automated line
Lower rm costs
Longer term contracts
Lesser employees.

Till now the capacity utilisation is at close to 60%, as the utilisation increases, there CAN be further operating leverage, leading to better margins


Hi, I agree with you, Along with small market size & number of SKUs as highlighted by you, CapEx requirements are quite small for steel strapping. Krishca has put up a plant with just Rs.20 Cr capEx (lower than that) and JSW management may not even think this size i guess & JSW’s current CWIP is Rs.22K Cr

Hi, Since Krishca is clearly focused on only steel mills, PET strap is not a threat at all. PET strap is for only low end packaging application like around 200-300 kg pallets etc. As you said, PET strap won’t withstand 700 degree temperature at all

Hi, It is mentioned by management during concall ( i am unable to paste screenshot right now but you can check it in transcript page no 9)

Yes, i agree with you, Due to two MNC player, procurement team from customer side might not have bargaining power and hence, new player is getting encouraged.

Hi, I got it, Current sales @ FY23 is Rs.72 Cr, If we presume 40% CAGR till FY27, Sales would be Rs.277 Cr (if steel price is same) and Current capacity utilised @ FY23 is 9900 ton (55% capacity utilisation for 18000 ton plant) and If we consider same 40% growth of capacity, they require 38000 ton capacity @ FY27 and Co now itself doubling their capacity. Hence, it is achievable i guess without further increasing capacity.

Valuation is debatable for everyone, we can take our own call as per our investing style and framework. In general, i rarely invest in Microcap since bit scared of high volatility. Despite that if i understand the co well, would like to buy at dead cheap / replacement cost & am ready to wait for such price and If it never comes, i am fine with it. Since i feel, whatever may be our fundamental understanding, only thing in our control is what valuation we buy.

Hi, earlier i worked in packaging industry. As per my experience, it is difficult to get entry into client place where Signode is the steel strapping supplier. At some places, despite my organisation was able to match the price & quality of product etc, it was impossible to get purchase order from client even for some small PO. (you can extrapolate based on this point that procurement team are not much interested to consider new players despite pricing & quality of product are met)

Hi, I already read your full content and understood the similarity / overlapping of content. But still i pasted here whatever i already noted from concall, website & DRHP for personal consumption & not removed overlapping content.

Thanks, You have really done a deep dive in the industry.


Hi, I got their audited financials for FY19 & FY20, please check below link and following are summary of Signode India Ltd’s consolidated audited financials but their EBITDA margin is 25%. I think, it is due to consolidated sales of their other packaging machinary & materials also. Only for steel strapping - it looks like, difficult to get the margin numbers,

Values are in Rs.Cr FY19 FY20
Revenue 1,348 1,329
Cost of goods 493 510
Purchases of stock in trade 307 282
Changes in inventories of finished goods 7 -8
Employee cost 202 216
other expenses 105 94
Total expenses 1,009 1,000
EBITDA 339 329
EBITDAM % 25% 25%


I am sharing my scuttlebutt analysis.

Current employees - 90 approx ( company staffs - 55 , contract staffs - 35)

new capex is for heavy packaging products. ultra high tensile strapping has 35% market in india which means new capex product has 350 crores to 500 crores business availability in india.

At present final output quality is 99.50%. Management is wants to try new grade chemical steel as a raw material. If it is working means quality rate jumps into 99.99%. It means rejection rate could be zero.

Management is not compensating with product quality. Even if the raw material price sometimes up they always wants to stick with quality raw material.

They have the production capacity of super jumbo coils 500 kgs. But their competitor GRIP has only upto 100 kgs. No info about signode india.

At present signode india is majorly focusing on packaging solutions only. No competitor is focusing on steel straps manufacturing business.

All competitor production lines are 20 to 30 years old lines. If they want to compete with krishca pricing then they need to change whole production line.

Raw material procurement

Krishca is procuring some raw material from chennai. They also procuring from bellari karnataka, west bengal too.

If I am going to supply steel straps to jsw or tata kind of companies they will insist to purchase raw material from them. If i am not purchasing raw materials from them then they will delay payments upto 90 days. if i am purchasing raw materials from them then the payments will be released within 30 to 60 days. These are non verbal agreement. (Disclaimer - these statement may be true or not. I am just sharing what i heard. Only for educational purpose).

Raw materials from jsw or other big corporates are placed on 100% advance payment only. Before placing order krishca needs to give 30% to 40% amount. After placing orders they need to settle remaining amount. Then only they will release the raw materials.

I am seeing this as a biggest moat as well as biggest drawback for krishca. Because if new player coming means he needs to put up so much money in raw material and inventory. Working capital could be huge if he needs to scale up the business. For krishca also these could be somewhat dragging. Their cashflow could be impacted. Need to watch how krishca here after going to manage working capital when they increase the production.

For signode india and grip their employee cost is around 7%. Most of their employees are aged above 30 plus. Their salary also above 3 to 4 lakhs. most of them may be joined with labour unions. so even if signode wants to fire the employees and wants to automise the production it could be somewhat difficult. But for krishca they are aiming to minimise employee cost 1.5 to 2% going forward. Their contract employess salaries in the level of 1.5 lakh per annum.

For shipping they are spending 6 to 7rs per ton per km if they wants to ship odisha or jharkhand or west bengal. But for their competitors it could take only 4 to 5rs per ton per km. Krishca is tackling this shipping cost with their employee cost. Also they made some long term arrangements with some transport companies.

Based on the above image we can clearly see that chennai to karnataka is only low distance. In vijayanagar jsw plant is located.

Their competitors also procuring raw ametrial from karnataka and west bengal. If signode or grip want to export then they need to transport to Vizag port. High distance for them. Where as for krishca its only 40km distance.

In gulf heavy competion from china and south korea. Krishca is going tackle this with one stop solution to their customers. They have plans to supply packaging instruments, employees, steel straps. By this way they are believing they could crack in gulf market. At present they are mostly supplying in gulf to small or unorganised players.

In packaging business they got something in west bengal. But the order size is unknown. Going forward if krishca wants to increase the revenue then they need strong presence in packaging business. Because packaging business requires less working capital and also long term revenue opportunities. But at present everyone is focusing on packaging business so i suspect how krishca wins here.

Top Steel Production state wise and capacity

Kindly note down below table data’s are based on FY2020 – 2021. As of now the production level is 126 million tonnes, increased 20% compared to 2021 volume. The capacity is also increased from 144 million tonnes to 154 million tonnes.

Future incremental Demand for steel straps in India

As per Management statement current overall steel strap consumption in India is 9000 – 11000 Tonne per month. For Conservative purpose we can take it 10000 tonnes per month. So yearly basis it will come around 120000 tonnes. Current Indian Crude steel production is 120 million tonnes approx…
So roughly 1 Tonne steel strap is used for 1000 Tonne crude steel production. (These are rough estimation only)…

New Welding Plant


Regarding welding business as far as i know market size is large. But if managements try to touch too many businesses at a time i might be worried.

PSU Business opportunity

In psu steel strapping i believe there is nice opportunity. Margin may be above 25% ( i don’t know exactly but assuming based on feedbacks). But receivable days is more than 120 in psu contracts.

Kindly share your feedback guys.

Disclaimer - These information collected from many people. So there could be something wrong or misplaced. Sharing it for only educational purpose


Krishca management has met funds yesterday. Below is a brief summary note. It seems that they will easily surpass the 40%+ Cagr guidance with Dubai plant plus packing contracts.

Looks like a solid long term fundamental story in making.


At Full capacity of both plants after commissioning top line of 300-350 cr in the next 4-5 years

-Apart from this 100 cr extra from packing solutions

  • Additionally 100 cr extra from Middle East plant.

  • Company has energy savings from induction blast furnace in comparison to muzzle blast furnace. However induction blast furnace replacement cost for competitiors is not exorbitant and can be done.

  • Psu tender applications started in August.

  • Company is put on its statement of 40%yoy revenue growth.

-The company is considering having its new plant in Eastern part of India (close to Orissa or Jharkhand).

  • Cost benefits in comparison to competitiors due to lower employee cost , energy costs etc.

  • New plant setup timeline - Dec

  • Dubai plant setup timeline - Second half of FY24.

  • Will acquire steel from China in its Dubai plant for cost benefit.


Hi mukul ji,

Did you get any info about welding expansion business?