When a company becomes public for the first time, the relationship is direct between the firm and the investors, and the money flows to the company as “Share Capital.” As a result of their participation in the Company’s IPO, shareholders become owners of the company and enjoy ownership rights over it. This is the most significant source of finances for a firm, allowing it to construct “Fixed Assets” that will be used in the course of the operation. The Company’s shareholders have the option to sell their shares on the secondary market.
Krishca Strapping Solutions Ltd Business Model
Since its inception in 2017, India Krishca Strapping Solutions Pvt Ltd has amassed considerable knowledge in the supply and trade of stainless steel scrap, hms scrap, high speed steel scrap, and so on. The supplier is based in Chennai, Tamil Nadu, and is one of the top sellers of the listed products. Buy stainless steel scrap, high speed steel scrap, and hms scrap in bulk from us for the finest quality products and service.
In Chennai, the company has a manufacturing facility with a capacity of 18,000 MT of steel straps and 80 million Seals each year.
Range of Products
Steel Straps
Steel straps are designed to provide remarkable physical and geometrical qualities while maintaining high quality. Each millimeter of the strap is subjected to a cutting-edge heat treatment process employing PLC-controlled automation, resulting in improved elongation, shock resistance, and break strength.
Strapping Seals
They provide a wide range of seals that are specifically engineered to work with their steel strapping. Their seals are precisely manufactured from high-quality CRFH sheets, and our cutting-edge press shop is outfitted with cutting-edge gear for precision fabrication. Their seals are made to international standards and are entirely compatible with all sorts of strapping tools.
Strapping Tools
Krishca has partnered with world-leading and recognised strapping tool manufacturers, guaranteeing that their product line represents the industry’s top manufacturers. Their comprehensive line of steel strapping tools comprises combination, pneumatic combination, manual tensioners and sealers, and pneumatic tensioners and sealers for all types of packing applications.
Krishca Strapping IPO details
IPO Reservation
Approximately 50% of the offer is allocated for qualified institutional buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors.
Objects of the Issue
Objects of the Krishca Strapping Solutions Limited Initial Public Offering: The Company intends to use the Net Fresh Issue Proceeds for the following purposes (“Objects of the Issue”):
1) Capital Expenditure for the Installation of a New Strapping Line.
2) Full repayment of certain secured borrowings obtained by the Company.
3) General Corporate Expenses.
4) Issue Expenses.
Financial Analysis
Amounts are in Lacs
The epidemic had a chaotic impact on the company’s finances, as seen by poor sales and heavy losses in the prior two years. Scale is particularly important in the steel business, and when operations are forced to run below scale, fixed costs are not fully absorbed.
While sales have more than doubled in FY22, raw material costs have increased by more than 85%, leaving the company with essentially no cost leverage. This is anticipated to keep operating margins under pressure in the coming quarters, unless raw material costs fall significantly.
In the current financial year we could see that the revenue of the company has shown a strong growth of almost 500% from FY22. Same goes with the net income. The company has shown huge growth in the current financial year. Therefore, the IPO is launched by the company.
Strengths
Well built Production Line
Krishca Strapping Solutions acquires the well built and an efficient production line in order to meet the demand of its various products such as Strapping seals, Steel straps and strapping tools etc.
Exceptional Steel Quality
The company does not compromise in maintaining the quality of the product, in order to be competitive in the market they buy exceptional quality steel for their product line.
Testing and Tracking
The company has a quality testing and tracking method, which aims to provide best quality products to its consumers.
Quality Raw material and Quality products
The company believes in this principle of “Quality Raw material lead to Quality products”. Therefore it uses quality raw material for the production of various product line such as steel straps, strapping tools etc.
Weakness
Accumulation of negative reserves
Due to earlier losses, the company had negative reserves and a surplus of Rs3.12 crore against a share capital of Rs3.01 crore. As a result, the entire net worth had been depleted to the negative zone. That was in fiscal year 21. The base share capital was increased to Rs3 crore in FY22, while profits produced during the year lowered the negative reserves from Rs3.13 crore to Rs 1.62 crore. However, the stock’s negative net worth will remain an overhang in the future months, potentially weighing on valuations as well.
Slow growth of steel sector
In the midst of a worldwide recession, high inflation, and an energy crisis in Europe, India’s steel market is nearly the sole source of hope for the global steel industry.
The World Steel Association forecasted 6.1% growth in steel demand in India in 2022 and 6.7% growth in 2023 last week. The amount for 2022 was somewhat lower than expected in April, but it remains the highest among the world’s largest steel consumers. The slow growth of the steel sector will also have a negative impact on the other derived industries such as Krishca strapping solutions ltd.
Conclusion
By looking at the above data and facts we could conclude the growth of the company Krishca strapping solutions ltd, is highly dependent on the performance of the steel industries. As the global recession is at its peak, yet India remains out of the impact. But it creates a fear of instability in highly sensitive sectors such as metal, automotive etc.
