BUSINESS OVERVIEW

Karbonsteel Engineering is a structural engineering and fabrication company engaged primarily in the design, fabrication, and assembly of heavy and precision steel structures, customized to meet client requirements across diverse industrial and infrastructure segments. The company has successfully delivered fabrication solutions for steel plants, railway bridges, oil & gas facilities, refineries, chemical plants, and large-scale industrial units. These fabricated structures form an integral part of construction, expansion, and modernization projects, covering industrial plants, high-rise buildings, and major infrastructure developments.

The company’s operations are broadly classified into four verticals:

I. Heavy Steel Fabricated Structures

This segment involves the manufacture of structural frameworks, steel columns, beams, crane girders, rafters, purlins, pipe racks, platforms, walkways, conveyor galleries, staircases, ladders, and heavy-duty support structures, essential for both operational and structural requirements of industrial plants and high-rise buildings. The process includes procurement of graded steel, cutting, drilling, bending, welding, machining, fit-up, assembly, surface treatment (shot blasting and painting), quality inspections, trial assembly, and final dispatch. Revenue contribution from this vertical stood at 68.85% in FY 2024-25, 72.24% in FY 2023-24, and 61.95% in FY 2022-23.

II. Precision Fabricated Steel Structures (Technological Structures)

This vertical covers furnace support structures, accumulator towers, galvanized tubing handrails, and welded/bolted steel structures, which require strict dimensional tolerances and compliance with project specifications. Activities span procurement, fabrication, machining, assembly, dismantling, blasting, priming, painting, inspection, trial assembly, and logistics. Revenue contribution was 27.00% in FY 2024-25, 11.70% in FY 2023-24, and 18.89% in FY 2022-23.

III. Steel Bridge Structures for High-Speed Rail Projects

Karbonsteel Engineering has leveraged expertise to expand into the manufacturing of steel bridge structures for high-speed rail corridors, including open web girders, built-up sections, and fabricated shutters for piers and pier caps. These structures are critical for load-bearing capacity, durability, and compliance with railway engineering standards. Operations include full-scale trial assemblies to ensure alignment before dispatch. Revenue from this vertical accounted for 3.34% in FY 2024-25, 11.32% in FY 2023-24, and 10.36% in FY 2022-23.

IV. Pre-Engineered Buildings (PEBs)

The company manufactures Pre-Engineered Buildings (PEBs), including structural members, crane beams, columns, rafters, purlins, pipe racks, staircases, handrails, checker plates, and roof gutters, fabricated from hot-rolled and cold-formed sections. Processes involve fabrication, machining, assembly, surface treatment, inspection, and delivery. Revenue contribution was 0.74% in FY 2024-25, 2.07% in FY 2023-24, and 1.04% in FY 2022-23.

Clients and Strategic Shift

The client base includes Arcelor Mittal Nippon Steel India Limited, Tata Projects Limited, John Cockerill India Limited, Ray Engineering Private Limited, JSW Severfield Structures Limited, and Panametrics Engineering Private Limited. Historically engaged in both manufacturing and trading of steel products, the company has strategically reduced trading operations to focus on value-added fabrication solutions. As a result, trading contributed only 0.06% of total revenue in FY 2024-25, compared to 2.67% in FY 2023-24 and 7.76% in FY 2022-23.

Manufacturing Facilities and Approvals

Karbonsteel Engineering operates two manufacturing facilities with a combined installed capacity of 36,000 MT per annum:

• Umbergaon, District Valsad, Gujarat (operational since 2017, spanning ~8.56 lakh sq. ft)

• Khopoli, District Raigad, Maharashtra (operational since 2014, spanning ~56,084 sq. ft)

Together, the facilities cover ~9.12 lakh sq. ft of land area, including covered production areas and open storage spaces. Both facilities are ISO 9001:2015 certified for Quality Management Systems and ISO 14001:2015 certified for Environmental Management Systems. Additionally, Plot No. 17 at Umbergaon facility is approved by RDSO (Ministry of Railways) for the fabrication of steel bridge girders, including composite and plate girders.

Raw Materials and Fabrication Process

The manufacturing process utilizes high-quality steel plates and sheets (E250, E350, E450, Hardox, Galvanized Steel), hot-rolled and galvanized coils, structural sections (I-beams, H-beams, RSJ, universal beams, angles, hollow sections), and seamless/ERW pipes. Fabrication relies on high-tensile, mild steel, and stainless-steel fasteners, along with SMAW electrodes, flux-cored wires, and shielding gases (Argon, CO₹, specialized mixtures) to ensure durability and structural integrity.

Industry and Market Environment

The Indian structural steel market is witnessing rapid growth, fueled by economic expansion, infrastructure development, and government initiatives such as Smart Cities Mission, Make in India, metro rail projects, and highway expansions. The National Steel Policy (NSP) 2017 further aims to increase domestic steel consumption to 160 kg per capita by 2030, reinforcing steel’s role in nation-building. (Source: D&B Report).

As of July 31, 2025, Karbonsteel Engineering employed 381 full-time employees, comprising 243 in fabrication and production, 27 in quality control, and 19 in automation & controls. The Banker to the company is HDFC Bank.

INDUSTRY ANALYSIS

Structural Steel Industry in India

The structural steel industry in India forms the backbone of the nation’s economic and infrastructural development, serving as a crucial enabler across sectors such as buildings, bridges, transportation, and industrial facilities. Steel has long been one of the most significant metals driving industrialization, and its production and consumption are widely regarded as benchmarks of a country’s economic progress. As both a raw material and an intermediary product, steel has consistently played a central role in India’s journey toward industrial growth.

India is currently the world’s second-largest producer of crude steel after China, benefiting from the domestic availability of raw materials like iron ore and a cost-effective labor base. This advantage has enabled rapid expansion, making steel a major contributor to India’s manufacturing output. Over the past decade, the industry has witnessed substantial progress—production has grown by 75% since 2008, while domestic demand has surged by nearly 80%. Alongside this growth, India’s steelmaking capacity has expanded significantly, with modernization and energy-efficient upgrades ensuring global competitiveness.

The structural steel segment, in particular, has emerged as a cornerstone of infrastructure development. Employing more than 1 lakh people and supported by over 5,000 SME fabricators, the industry enjoys strong backward linkages with the primary steel sector. Technological advancements such as automated cutting and welding, 3D modeling, and laser cutting have improved efficiency, precision, and cost optimization. The demand for pre-engineered buildings (PEBs) is further accelerating growth, offering cost-effective and rapid construction solutions that align with India’s evolving urban and industrial needs.

Importance and Characteristics of Structural Steel

Structural steel is a high-performance construction material designed for applications where strength, durability, and resilience are critical. It comes in standardized forms such as I-beams, H-beams, hollow structural sections (HSS), channels, and plates, ensuring consistency in size, composition, and mechanical properties. Its exceptional strength-to-weight ratio makes it both strong and lightweight, which is vital in supporting large structures with minimal material use. Moreover, its ductility allows it to deform under stress without breaking, making it ideal for withstanding dynamic forces like wind and earthquakes.

Steel’s versatility makes it indispensable in infrastructure, commercial real estate, industrial facilities, and even specialized sectors like shipbuilding. From heavy structural steel used in bridges, dams, and power plants to light structural steel for doors, windows, and roofing, it caters to a wide range of applications. The use of coatings such as galvanization, epoxy, and polyurethane further enhances its durability and corrosion resistance, particularly in demanding environments.

Sustainability and Green Initiatives

A defining strength of steel lies in its sustainability. With over 90% of global steel recycled, it stands as one of the most environmentally responsible materials in construction. The adoption of electric arc furnaces (EAFs) has helped reduce carbon emissions by using scrap steel instead of virgin raw materials, aligning with global efforts to lower the industry’s carbon footprint. Combined with its long life cycle and low maintenance needs, structural steel is increasingly positioned as a preferred choice for green buildings and sustainable infrastructure.

Manufacturing and Technology Integration

The structural steel manufacturing process spans several key stages—design, detailing, procurement, cutting, bending, welding, quality control, and finishing—each essential for ensuring compliance with safety and durability standards. The adoption of advanced software tools like CAD, BIM, and CNC-controlled fabrication systems has transformed the industry, improving accuracy, minimizing waste, and reducing errors. The integration of Industry 4.0 solutions, digital task management, and automated machining has further streamlined production while supporting cost-effectiveness.

Market Dynamics and Growth Drivers

India’s structural steel market has been on a steady upward trajectory, driven by booming construction activity, infrastructure expansion, and industrialization. The construction sector remains the largest consumer, spanning high-rise buildings, airports, metro systems, and commercial real estate. Projects such as metro rail networks, highway corridors, and smart cities have reinforced demand, while the shipbuilding and transportation sectors continue to rely heavily on steel for resilience and durability.

Government policies have been a strong catalyst for this growth. Initiatives such as Make in India, the Production-Linked Incentive (PLI) scheme, the National Infrastructure Pipeline, and the Smart Cities Mission have significantly increased demand for structural steel. The National Steel Policy (NSP) 2017, targeting a per capita steel consumption of 160 kg by 2030, underscores the government’s long-term vision to strengthen domestic capacity.

Challenges and Opportunities

Despite its positive trajectory, the industry faces challenges such as volatile raw material prices, particularly coking coal, and increasingly stringent environmental regulations. The competition is intense due to low entry barriers and the presence of both domestic and international players. Alternative materials like aluminum and concrete also pose competitive threats in some applications.

However, opportunities far outweigh the challenges. The rising adoption of pre-engineered buildings, coupled with growing demand for green and sustainable construction, is creating significant momentum. Eastern India, with its resource-rich base, is set to play a vital role in capacity expansion by 2030. Moreover, advancements in automation, high-strength materials like E250/E350/E450, and sustainable production practices are opening pathways for long-term growth.

Growth Outlook

The outlook for India’s structural steel industry is highly promising. As the economy expands and infrastructure development accelerates, demand for structural steel will continue to surge. The manufacturing sector, which contributes around 17% to India’s GDP and USD 447 billion in exports, is projected to grow at a CAGR of 4.8% between 2025 and 2030, further driving steel consumption. By 2030, India aims to achieve USD 1 trillion in manufacturing exports, supported by strong policy initiatives and global supply chain diversification strategies under the "China Plus One" model.

In conclusion, the structural steel industry in India is not only a key pillar of infrastructure and industrial growth but also a sector that reflects the country’s economic ambitions. With robust government support, technological advancements, and rising demand for sustainable construction solutions, structural steel is poised to remain integral to India’s long-term progress and global competitiveness.

BUSINESS STRENGTHS

1. Capabilities to Execute Large-Scale Industrial and Infrastructure Projects
Karbonsteel Engineering has demonstrated strong execution capabilities through the fabrication and supply of 10,000 MT of steel bridge structures for the Mumbai-Ahmedabad High-Speed Rail (MAHSR) project, India’s first bullet train corridor, executed as a sub-contractor to a leading infrastructure company. The track record also spans structural engineering and fabrication projects for steel plants, oil & gas facilities, refineries, chemical plants, high-rise buildings, and industrial units, requiring strict dimensional accuracy, quality-controlled welding, and specialized surface treatments to meet operational and safety standards. The company has also delivered Pre-Engineered Buildings (PEBs) and technological structures, including structural members, crane beams, rafters, purlins, staircases, pipe racks, and industrial enclosures. Experience across multiple sectors has strengthened the order book and expanded customer engagement.

2. Strong Order Book and Financial Growth
The order book serves as a clear indicator of future revenue visibility and has shown significant growth, rising from ₹ 6,487.99 lakhs as of March 31, 2023 to ₹ 16,632.88 lakhs in FY 2024 and ₹ 19,892.46 lakhs in FY 2025. As of July 31, 2025, the order book stood at ₹ 32,981.97 lakhs. This growth has been mirrored in financial performance, with revenue from operations of ₹ 15,558.03 lakhs in FY 2023, ₹ 21,833.76 lakhs in FY 2024, and ₹ 27,305.35 lakhs in FY 2025. Corresponding EBITDA stood at ₹ 1,622.17 lakhs, ₹ 2,578.80 lakhs, and ₹ 3,660.93 lakhs, respectively. A robust financial position also supports access to bank financing, enabling the company to secure additional work orders and reinforce order book strength.

3. In-House Manufacturing and Testing Capabilities
Operations are supported by two manufacturing facilities located at Umbergaon, Gujarat, and Khopoli, Maharashtra, with a combined fabrication capacity of 36,000 MT per annum. The Umbergaon facility, spanning approximately 8.56 lakh sq. ft and equipped with a capacity of 30,000 MT per annum, houses an extensive range of fabrication and testing equipment. Key assets include CNC drilling machines, beveling machines, end milling machines, stud welding machines, EOT cranes, hydraulic mobile cranes, CNC cutting machines (oxy-fuel and plasma), GMAW welding machines, and airless painting systems. Advanced quality control infrastructure includes ultrasonic testing machines, magnetic particle testing equipment, coating thickness gauges, and digital vernier calipers, ensuring compliance with stringent standards.

4. Strong Customer Relationships
Karbonsteel Engineering maintains long-standing relationships with esteemed customers such as Arcelor Mittal Nippon Steel India Limited, Tata Projects Limited, John Cockerill India Limited, Ray Engineering Private Limited, JSW Severfield Structures Limited, and Panametrics Engineering Private Limited. Sustained customer retention highlights the company’s ability to deliver consistent quality and reliability, with a significant portion of revenue derived from repeat customers, reinforcing business sustainability and growth.

5. Experienced Promoters and Strong Management Team
Leadership is provided by Promoters and Directors Shrenik Kirit Shah and Mittal Shrenik Shah. Shrenik Kirit Shah, Promoter and Managing Director, brings over 19 years of experience in the steel industry, playing a pivotal role in strategic decision-making and operational management. The company is further supported by a senior management team and technically skilled engineers, combining domain expertise with execution capabilities. The management’s industry knowledge, experience, and strategic vision position Karbonsteel Engineering to capitalize on both current and emerging opportunities in the structural engineering and steel fabrication industry.

BUSINESS STRATEGIES

1. Expansion of Manufacturing Facility at Umbergaon, Gujarat
The company plans to expand its existing manufacturing facility located at Umbergaon, District Valsad, Gujarat. The Indian structural steel fabrication market is projected to witness steady growth, supported by rising demand from the manufacturing sector, the increasing preference for pre-engineered buildings (PEB), and strong government-led infrastructure initiatives. The surge in pre-engineered building adoption—owing to cost efficiency, shorter construction timelines, and sustainability advantages—continues to strengthen the market outlook. Additionally, national programs such as Make in India, smart cities, the Production-Linked Incentive (PLI) scheme, and green building initiatives are expected to create significant opportunities. Currently, Karbonsteel Engineering operates two manufacturing units: one at Umbergaon, District Valsad, Gujarat, which achieved 95.23% capacity utilization during the six-month period ended March 31, 2025, and another at Khopoli, District Raigad, Maharashtra, which operated at 67.46% capacity during the same period.

2. Strengthening Presence in Railway Infrastructure
A key focus area is to enhance participation in India’s railway infrastructure segment. From FY 2021 to FY 2026, the Union Budget has progressively increased allocations toward the sector, with a total capital expenditure outlay of ₹2,652 billion in the Budget Estimate 2025–26. Although the Gross Budgetary Support for Railways in FY 2025–26 stands at ₹2,520 billion—slightly lower compared to the previous year—the allocation reflects a significant rise from ₹1,122 billion in FY 2021. The capital expenditure is primarily directed toward critical projects such as rail track expansion, electrification, procurement of rolling stock, signalling upgrades, and station modernization. In addition, provisions include ₹100 billion from extra budgetary resources, ₹2 billion under the Nirbhaya Fund, and ₹30 billion from internal resources, reinforcing the long-term growth potential of the sector.

3. Commitment to Quality Standards
Maintaining high quality standards in steel structure fabrication remains a central strategy. The emphasis is on consistent adherence to customer specifications and compliance with applicable regulatory requirements. To achieve this, the company follows a systematic approach that includes continuous review of fabrication processes, rigorous quality checks across multiple production stages, and prompt implementation of corrective actions whenever necessary. This quality-driven approach is designed to strengthen reliability, enhance customer satisfaction, and support long-term growth.

BUSINESS RISK FACTORS & CONCERNS

1. Dependence on Capital Investments in Industrial and Infrastructure Sectors
The company’s performance is closely tied to capital investment cycles in industrial and infrastructure sectors such as steel plants, refineries, oil and gas installations, chemical plants, high-rise buildings, high-speed rail projects, and other large-scale developments. Any slowdown in these sectors due to adverse economic conditions, changes in government policies, or project-specific factors could materially impact business operations, financial condition, and results.

2. Reliance on Manufacturing Facilities and Associated Risks
Operations are heavily dependent on two manufacturing facilities located at Umbergaon, District Valsad, Gujarat, and Khopoli, District Raigad, Maharashtra. Manufacturing processes involve heavy machinery, which exposes the business to risks such as equipment breakdowns, power disruptions, inefficiencies, obsolescence, labor disputes, natural or man-made disasters, and political instability. Any disruption, slowdown, or shutdown of these facilities could significantly affect production capacity, cash flows, and long-term prospects.

3. Geographical Concentration of Operations
The company’s operations are geographically concentrated, with both manufacturing facilities located in Gujarat and Maharashtra. This concentration increases exposure to local and regional risks, including economic fluctuations, demographic changes, adverse weather, natural disasters, and political or social instability. Although no major regional disruptions have occurred during Fiscals 2023, 2024, and 2025, future occurrences could materially affect revenue, financial condition, and operational stability.

4. Intense Industry Competition
The structural steel fabrication industry is highly competitive and fragmented, with competition arising from domestic and international fabricators, engineering firms, and EPC contractors with in-house fabrication capabilities. At the regional level, smaller players offer specialized solutions, while nationally and internationally, larger companies with stronger financial resources, economies of scale, and extensive customer bases pose significant challenges. Notable competitors in the organized segment include Goodluck India Limited, Salasar Techno Engineering Limited, and Atmastco Limited. Increased competition could lead to pricing pressures, reduced revenues, and loss of market share.

Summary of Key Risks :
Karbonsteel Engineering faces risks from dependency on capital investment cycles, reliance on two geographically concentrated manufacturing facilities, and exposure to operational disruptions from heavy machinery usage. Additionally, the company operates in a highly competitive market where stronger players could pressure pricing and market share. Collectively, these factors could materially impact the company’s revenue, profitability, and long-term growth prospects.