We know that S Gupta Family Investments Private Limited holds 4% share in Krishca Strapping Solutions as a strategic partner.

In S Gupta Family Investments, Neera Gupta and Megha Gupta are the directors.

Neera Gupta is wife of Sanjay Gupta and Megha Gupta is daughter-in-law of Sanjay Gupta.

Neera Gupta also holds 11.39% share in SG Mart.

After analysing this information, it seems that strategic partnership between APL Apollo and Krishca is happened considering the requirements of SG Mart. As SG Mart is going to open 100 service centers and warehouse throughout India by 2030, where the strapping & packaging is going to be a crucial element. (For details anyone can go through the thread of SG Mart).

Along with getting strapping and packaging contract from SG Mart, krishca can also use the reach of SG Mart to sell their hardened & tempered speciality steel products from its new plant, commissioned in May 2024.

Krishca is also in the process of setting up a Cold rolled steel strips mill and a MIG welding wire plant. As per management 35% of Cold Rolled steel strips will be use for captive consumption and remaining will be sold in market. For selling these products in future, again SG Mart can play the role of an intermediary.

So, this strategic partnership is a win-win situation for both parties.

Few more things on hardened & tempered/Cold rolled steel strips:

Hardened and tempered /Cold Rolled steel strips are used in a variety of industries, including: Automotive, Electrical, Medical, Hand tools, and Agricultural. There isn’t much information about the size of the hardening and tempered steel strips and Cold Rolled Steel Strips industry in India, but here are some companies that manufacture and supply these strips:

Stelco Limited is one of the leading Manufacturers of Hardened & Tempered Steel Strips with a production capacity of about 22000 MT/annum and Cold Rolled Steel Strips with a production capacity of 35000 MT/annum. https://stelcolimited.com/

KND Steel Syndicate was established in 1981, India’s leading manufacturer & exporter of Low, Medium & High Carbon annealed steel strips and Hardened & Tempered steel strips. https://www.kndsteel.com/

Steel Corporation India is a leading manufacturer of hardened and tempered steel strips and Cold Rolled Steel Strips in India. https://www.steelcorp.in/

As I started reading more about the company, I found it to be strong in terms of its growth and long-term potential. However, I noticed that the company’s Chairman, who is also the founder, is a key member of the board, along with other family members holding significant positions, including the Joint Managing Director and a Non-Executive Director. Additionally, I see that the Chairman and his family are the only promoters of the company, with the Chairman himself holding nearly 92% of the shares. Isn’t it a very big red flag?
Board of director.

Promoters

Hi Rajneesh,

I generally don’t like to predict about a company’s stock future as I will be betting on or against collective mood and wisdom of the market that can surprise even the brightest and most seasoned investors (and I am none of them).

But if I were to make a commentary on business model of Shakti Pump, I wont be very enthused and here is why. Again views are personal and won’t rule out any subjectivity in them.

Most of Shakti Pump’s contracts (if I am not wrong) are with government customers and that itself is dealbreaker for me. Although cyclicality and cash flow lumpiness with any government business is a given, what I don’t like is their unpredictability. A business like that should get very low valuations (and not what Shakti Pump is getting today).

Any company (let alone smaller players like Shakti Pump with no bargaining power) doing business with government will always have issues of collections, delays in execution, or policy changes. And if entry barriers or differentiator are not present, they will always have to be the lowest cost bidder to win these tenders which caps their margin. So it’s a double whammy where you have unpredictability in margins and cash flows.

If I were really forced to invest in these companies I will get in when story looks bleak for them (e.g. low margins and valuations) and get out when hype is fully built up (margins and valuations peaking out).

I would worry about terminal values for long term investments and not for short term trading calls. To me a small scale pureplay solar pump business with heavy reliance on government contracts can’t be a long term bet.