Karbonsteel Engineering Limited submitted a transcript of its earnings conference call held on June 12, 2026, to the Bombay Stock Exchange in compliance with SEBI Listing Regulations (Reg. 30(6) read with Para A of Part A of Schedule III).

The call, hosted by management including Managing Director Mr. Shrenik Kirit Shah and CFO Mr. Ganesh Bhandary, covered the financial results for the half year and year ended March 31, 2026 (FY26).

Financial Performance Overview

  • The company reported that revenue for FY26 crossed ₹300 crore for the first time, up from ₹273 crore in FY25.
  • EBITDA margin was reported at 10.86% for the year.
  • Profit After Tax (PAT) was ₹10.51 crore.
  • The PAT figure includes several one-time costs: a bad debt write-off of ₹1.65 crore following an NCLT ruling, rental costs of ₹2.4 crore due to delayed capex, and rundown/shifting charges for the Khopoli facility.
  • Management stated that the normalized PAT, after adding back these one-time costs, would be approximately ₹16.56 crore.
  • Finance costs were maintained at 5% of turnover.

Operational Challenges & Strategic Decisions

  • The company faced significant operational challenges in FY26, primarily a force majeure event from its sole LPG supplier starting in early March 2026. This disrupted cutting and cooking gas operations, affecting project completion in the critical month of March.
  • Labor migration began in March due to the LPG crisis, leading to labor unrest and affecting project timelines.
  • The company faced cost inflation on multiple fronts, including a nearly 25% rise in steel prices, as well as increases in paint, consumables, and direct expenses.
  • A strategic decision was made to exit the Khopoli facility (2.5 acres) and consolidate operations at the larger Umargam facility (over 20 acres) to better serve the target clientele and projects.
  • The company performed a conversion job for an important client, which compressed revenue by approximately ₹40 crore, as the client had already supplied the material.
  • Production volume, including labor jobs, was 22% higher than the previous year. The company operated at 90% production capability despite challenges.

Order Book & Business Development

  • The order book grew from approximately ₹200 crore to ₹350 crore as of May 2026.
  • The company has delivered over 1 lakh tons of structures to clients in industries including data centers, infrastructure, power plants, steel plants, metal plants, chemical units, refineries, and airports.
  • Significant projects included delivering 4,500 tons for the bullet train span and work for the Vashi and Atal Setu bridges.
  • The company finished audits for two of India's largest business houses and a major power plant company, with these clients expected to be added starting FY27.
  • An MOU was signed for 15,000 tons specifically for data centers.
  • Approximately 90-95% of orders are repeat business.

Capacity Expansion & Capex

  • The company is expanding its Umargam facility capacity from 30,000 tons to 54,000 tons per annum.
  • The expansion was initially targeted for completion in March 2026 but has been delayed due to civil construction and labor delays. The revised completion timeline is October 2026.
  • The expansion is 60% complete, with Sheds 1 and 2 under construction. Machinery installation is expected by October 2026.
  • Work-in-progress for this capex is ₹21 crore, with an additional ₹10-15 crore investment planned for the next year, primarily for automation.
  • A 1-megawatt solar plant is being installed in two phases at a cost of ₹3-3.5 crore. It is expected to reduce power bills by over 50% and be operational by October/November 2026.

Management & Automation Initiatives

  • Mr. Satis, a chemical engineer with 20 years of experience, joined as Technical Director.
  • Mr. Sunil Kataria, who has overseen over 1 lakh tons of structural erection for JSW, is part of the guiding team.
  • Automation initiatives are being pursued in areas like cutting, automatic beam welding, and the fit-up center to improve efficiency by 15-20% and mitigate labor challenges. A blasting machine is under installation.

Guidance & Outlook

  • For FY27, the company expects to produce approximately 40,000 tons at a sales realization of about ₹100 per kg.
  • Normalized EBITDA margin is expected to be in the range of 12-13%.
  • PAT margins are expected to be around 4-5% for FY26 and move above 5% for FY27.
  • The company aspires to achieve 7-8% PAT margins in the long term.
  • The goal is to reach the full expanded capacity of 54,000 tons in FY27.
  • Further expansion post-FY27 is contemplated to reach revenue of ₹800-1,000 crore and monthly production of 7,000-8,000 tons, which would be funded through internal accruals and equity.

Working Capital & Finance

  • Inventory days improved from 150 days last year to 130 days currently, with an internal goal of 90-100 days.
  • Long-term borrowings were reduced by ₹5 crore and short-term borrowings by ₹10 crore.
  • The company utilizes working capital facilities including TReDS, bill discounting for MSME invoices, an ₹80 crore letter of credit, channel financing, and takes advances from clients against bank guarantees.
  • Most debt is at interest rates between 8% and 11%, and finance costs are expected to be around 4% of turnover going forward.
  • The working capital cycle involves 30-45 days for steel procurement, 90 days for production, 15-20 days for painting/dispatch, and 30-60 days credit post-dispatch. A 5% retention is received 6-12 months after project completion.